Daiwa House Logistics Trust makes flat debut amid broader market tumble

Japanese 1,000 yen notesJapanese 1,000 yen notes

Daiwa House Logistics Trust made a tepid debut on SGX, ending Friday flat at its S$0.80 initial public offering (IPO) price, which was also its day’s low, and off the day’s high of S$0.808.

The units, however, outperformed a 1.72 percent drop in the benchmark Straits Times Index.

The lukewarm first-day performance belied the strong demand for the trust’s units during the offering, with the Singapore public offer 9.5 times oversubscribed and the placement tranche 4.9 times oversubscribed.

Around 28.88 million units changed hands in the half-day after trade began at 2:00 p.m. SGT, according to Bloomberg data, marking less than around 5 percent of the total number of units.

That compared with 25 million units offered to the Singapore public and 219.44 million offered in an international placement, as well as 336.06 million to cornerstone investors and 94.5 million to the trust’s sponsor Daiwa House Industry, which is one of Japan’s largest construction and real estate development companies.

DBS, acting as a stabilisation agent, acquired 980,600 units in the market at S$0.80, the bank said in a filing to SGX Friday.

Clarence Chu, an analyst/Insight Provider at Aequitas Research, noted that historically, overseas-related REITs tend to have tepid debuts, with relatively weak liquidity at first.

While the trust’s cornerstone investors, with the exception of DBS Bank, are not bound by lock-up agreements, most of Daiwa House Logistics Trust’s cornerstone investors are long-only investors, Chu, who publishes on Smartkarma, said in a note Thursday.

“We are not expecting a selldown in the near term at least,” Chu said.

The initial portfolio will have 14 logistics properties in Japan, with an appraised value of around 80.57 billion yen, or around S$952.9 million, the prospectus said. DHLT will pay a total purchase consideration for the IPO portfolio of 71.07 billion yen, or around S$840.5 million, according to the prospectus.