Daiwa Kawasaki Yako

Daiwa House’s combination of Japanese and Southeast Asian opportunities proved compelling to investors

Units of Daiwa House Logistics Trust began trading Friday afternoon on the Singapore Exchange after the Japan-focused industrial REIT’s IPO proved a smash hit with investors.

Priced at S$0.80 per unit, the public offering comprised an international placement of 219,438,000 units to investors outside the US and a placement of 25 million units to the public in Singapore.

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Signs pointed to a subscription rate of 4.5 times for the international placement and 9.5 times for the Singapore public offering, the latter of which received 7,543 valid applications for 236,990,660 units, DHLT’s manager said Thursday in a release. The REIT’s cornerstone investors subscribed for 336,062,000 units, representing 49.8 percent of outstanding units at the IPO.

“We are pleased to have received such strong support from cornerstone, institutional and retail investors for our offering,” said Takeshi Fujita, chief executive of the trust’s manager. “We believe that this is testament to the attractiveness of our portfolio of high-quality modern logistics properties, as well as the strength of our sponsor — Daiwa House Industry Co Ltd, one of the largest construction and real estate development companies in Japan.”

Strong Interest Seen

The manager said the international placement attracted interest from a mix of institutional investors, insurance firms, multi-strategy funds, family offices and high-net-worth individuals, with Credit Suisse, DBS Bank, Nomura and Bangkok Life Assurance among the cornerstone backers.

Keiichi Yoshii daiwa house president and ceo

Daiwa House chief executive and president Keiichi Yoshii

DHLT had sought to raise S$575.5 million ($423 million) from the public offering that closed Wednesday, including S$540 million from the public offering and the issuance of Daiwa House’s subscription units and the cornerstone investors’ units, plus S$35.5 million from the issuance of perpetual securities.

That capital haul would make this week’s debut the biggest IPO on the Singapore Exchange since materials maker Nanofilm Technologies International raised $346 million in October 2020, Bloomberg reported.

The trust’s seed portfolio comprises 14 warehouse assets across Japan valued at S$952.9 million and covering a net lettable area of 423,920 square metres (4,563,037 square feet), according to a final prospectus released last Friday. The portfolio’s acquisition cost is S$840.5 million, representing an 11.8 percent discount to its value as appraised by Savills and CBRE.

The 14 seed assets have a weighted average lease expiry by occupied NLA of 7.2 years, an average age of 3.7 years and an occupancy rate of 96.3 percent.

ASEAN Ambitions

DHLT’s seed portfolio features six properties in Greater Tokyo, including the largest and highest-valued asset, DPL Kawasaki Yako, a 93,159 square metre facility appraised at JPY 20.75 billion ($180 million).

Other large holdings include the 60,347 square metre DPL Sapporo Higashi Kariki on the island of Hokkaido, valued at JPY 12.25 billion, and the 63,119 square metre DPL Sendai Port northeast of Tokyo, valued at JPY 12.6 billion.

While DHLT is the first Singapore-listed REIT to concentrate on Japanese industrial properties, the acquisition pipeline also includes 11 assets in Indonesia, Vietnam and Malaysia. The trust’s manager views the ASEAN region as a key area of focus given demand for overseas logistics and manufacturing bases, particularly from Japanese-based tenants.

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“The sponsor has granted a right of first refusal to DHLT over the sponsor’s pipeline of assets in Southeast Asia and Japan,” Fujita said. “With committed support from the sponsor and backed by the attractive fundamentals of the logistics market in Japan and Southeast Asia, we aim to generate stable distributions for unitholders, while achieving long-term growth.”

When factoring in the acquisition pipeline in Southeast Asia and Japan, the portfolio’s potential size is 42 assets and 1,536,000 square metres.

Founded in 1955, sponsor Daiwa House has developed 1.9 million residential units and completed 54,900 commercial facility projects. A Nikkei survey conducted in June found the Osaka-based group to be the most recognisable logistics asset brand and developer in Japan.

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