Daiwa House Logistics Trust’s Occupancy Improves, but Property Income Falls 13.8%

Daiwa House Logistics Trust (SGX: DHLU) has made progress filling vacant space, but the improvement has yet to show up in its reported property income. Its 13 November business update covers the nine months ended 30 September 2026: portfolio occupancy rose to 88.5% at quarter-end, while net property income in Singapore dollars fell 13.8% from a year earlier. For unitholders, the question is when fuller buildings might translate into a stronger distribution. [S1, p. 5] [S1, p. 15]

More space let, with a gap still to fill

Occupancy increased from 87.8% at 30 June to 88.5% at 30 September. DHLT also reported four lease renewals during the nine months, with a weighted average rent uplift of 3.3%. Those are encouraging operating signs, although a renewed lease does not by itself offset income lost from vacant space elsewhere. [S1, p. 5]

There were important changes after quarter-end. DHLT said the vacant unit at DPL Kawasaki Yako, its largest property, was filled in November. But space vacated at DPL Sendai Port in October reduced that property's occupancy from 31.9% at September-end to 23.9%. The manager's illustrative portfolio occupancy of 89.3% assumes both later changes had already occurred on 30 September; it is not the reported quarter-end figure. [S1, p. 5] [S1, p. 9]

Why income is still lower

For the nine months, Japan portfolio net property income fell from JPY3,608 million to JPY3,394 million. DHLT attributed the decline mainly to vacancies at Sendai Port and Kawasaki Yako, partly offset by the contribution from a property acquired in March 2025. Vietnam property income was broadly steady in its local currency. [S1, p. 15]

Translated into Singapore dollars, total portfolio net property income declined from S$33.7 million to S$29.1 million. The manager cited both weaker Japanese and Vietnamese currencies against the Singapore dollar and the lower Japan contribution. Filling Kawasaki Yako after September may help future rent, but this update does not establish how much of the income decline it will recover. [S1, p. 15] [S1, p. 5]

The last reported distribution per unit was 1.82 Singapore cents for the first half of 2026, down from 2.24 cents for the corresponding half of 2025. Distributable income fell from S$15.696 million to S$12.792 million. Those are unaudited half-year results, not a new nine-month distribution figure. The September payment date disclosed in the half-year announcement is past; it creates no new entitlement from this November update. [S3, p. 6] [S3, p. 26] [S3, p. 29]

Refinancing is the next test

At 30 September, DHLT reported aggregate leverage of 41.1% and interest coverage of 4.5 times. Two borrowing tranches totalling JPY12.0 billion mature in the fourth quarter. In its 13 November release, the manager said refinancing was on schedule, but it did not report completed terms. The eventual borrowing cost matters to the cash available for future distributions. [S1, p. 17] [S2, p. 2]

DHLT has also proposed selling the poorly occupied Sendai Port property and acquiring another logistics facility. The sale requires unitholder approval, and the acquisition depends on completion of the sale. Until those transactions and the refinancing are resolved, their effect on distributions remains prospective. [S1, p. 9] [S1, p. 10]

The operating update offers a plausible path to better income through leasing and asset recycling. It does not yet demonstrate a distribution recovery. The next useful evidence will be the refinancing terms, completed transaction details and a financial statement showing whether higher occupancy lifts distributable income. [S1, p. 5] [S1, p. 10] [S1, p. 17]