Singapore’s Global Logistic, GIC to invest $8.1 bn in US logistics portfolio
08 Dec 2014
Singapore's Global Logistic Properties Ltd (GLP), a leading provider of modern logistic facilities, and the country's sovereign wealth fund GIC will jointly acquire one of the largest logistics real estate portfolios in the US for $8.1 billion.
Initially, GLP will hold a 55-per cent stake in GLP US Income Partners I, while GIC will own the remaining 45 per cent.
The transaction is expected to close in the first quarter of 2015.
Further, GLP intends to reduce its holding from 55 to 10 per cent by syndicating it to other capital partners who have shown strong interest in the US logistics portfolio.
GLP's co-founder and chief executive officer Ming Z. Mei said, ''This transaction gives us immediate scale as well as the best team in the US logistics market. The local management team is very experienced and we expect significant synergies given that we have worked with and alongside more than half of them previously.''
GLP is the leading provider of modern logistics facilities in China, Japan and Brazil. Its property portfolio of 28 million sq.m is strategically located across 77 cities, serving 800 customers. The company's assets as at the end of September stood at $20 billion.
The acquired portfolio includes 117 million sq.m of total gross floor area spread across 36 major sub-markets in the US. It is 90 per cent leased as of 30 September 2014 with average lease expiry of 3.2 years.
GLP intends to increase the lease ratio in the near-term. Increasing rents and occupancy provide potential for upside, the company said.
The US industrial real estate market has been experiencing solid growth recently. Lack of construction over the past five years has led to limited new supply of 0.4 per cent of total stock per year. There is stable demand for logistics infrastructure driven by continued growth in retail and e-commerce sale.
The Company's final 10-per cent stake represents $330 million of equity, or 4 per cent of GLP's net asset value.
GLP intends to fund the deal with cash on hand and a short-term credit facility.
The transaction will boost GLP's fund management platform by 61 per cent to $21.3 billion.
The final investment in GLP US Income Partners I is expected to generate a pre-tax yield of 9 per cent in the first year, including GLP's share of operating results and fund management fees, the statement said.
''While we are very excited to broaden GLP's market exposure and selectively expand our footprint into the best logistics markets internationally, China remains our key growth market. GLP will continue to focus on executing our expansion plans in China, Japan and Brazil, while also growing our fund management platform,'' Ming Mei said.
