DHLT (Daiwa House Logistics Trust) is reportedly planning to acquire a portfolio of a piece of freehold land and two logistics facilities in Japan for 4.68 billion yen ($32.8 million).
The manager of the real estate investment trust (Reit) estimated this to be 11.8% discount on the properties' appraised valuation in a filing on Wednesday.
The Reit manager also believes that adding DHLT to its portfolio will increase its revenue base and spread it across different areas of Japan, reducing any potential concentration threat and portfolio effects from earthquakes.
Mr. Takeshi Fujita, the Reit manager's CEO, stated that the portfolio is totally freehold, and is occupied by top-quality tenants, including one of the largest integrated Japanese companies. It believes that the acquisition will improve the quality of its existing portfolio.
The Reit plans to use a mix of bank borrowings and a projected sponsor subscription of DHLT units totaling 1.25 billion yen ($8.7 million) to pay for the acquisition. The minimum issue price for the subscription, which is 77 cents per unit, is 14.9% more than DHLT's closing price on September 20.
It is anticipated that this deal, which will be Reit's first purchase, will increase DHLT's distribution per unit (DPU) by around 1.3% based on Pro-forma from the time of its debut on November 26, 2021, until June 30, 2022. This is based on the presumption that the planned acquisition and sponsor subscription would both be finished on December 2, 2022.
As of June 2022, both target portfolios' free logistics facilities, namely, DPL Iwakuni 1 & 2 as well as D Project Matsuyama S were fully leased to listed businesses.
The total land area of the target portfolio is approximately 420,393 square meters. By the end of June, the weighted average lease expiry (Wale) by NLA or net lettable area was 6.7 years.
Following the announcement, DHLT units rose by 2.24%, to 68 cents.
Source credit: https://www.straitstimes.com/business/companies-markets/daiwa-house-logistics-trust-proposes-477m-maiden-acquisition-in-japan