Singapore-listed Global Logistic Properties (GLP) on July 29 announced that it has entered into a definitive agreement to acquire a US$4.55 billion worth of US logistics portfolio from Industrial Income Trust, which it intends to inject into its fund management platform.
GLP expects to own 100% of the portfolio upon closing by November 16 2015, but it will pare down its stake to 10% by April 2016. The company said the 10% stake – equivalent to US$190 million – is expected to generate compelling returns within the first year of investment. This includes GLP’s share of operating results and fund management fees. The portfolio will be acquired at a cap rate of 5.6%.
“Demand from major institutional investors to invest with GLP in the US logistics real estate is strong, with GLP in negotiations with several new and existing capital partners,” the company adds in a statement.
The transaction will enlarge GLP’s US footprint by 50% to 173 million sq ft, with GLP becoming the second largest logistics property owner and operator in the US within a year of market entry. Subsequent to this transaction, GLP’s global portfolio will encompass more than 500 million sq ft valued at about
US$33 billion. GLP is also the largest provider of modern logistics facilities in China, Japan and Brazil
The portfolio, selectively aggregated through over 100 separate transactions over a period of five years, is one of the highest quality portfolios in the US. It comprises 58 million sq ft spread across 20 major markets, the largest of which include Los Angeles, Metro DC and Pennsylvania.
The portfolio was 93% leased as of June 30 2015 with a weighted average lease expiry of nearly 5.5 years. GLP is focused on increasing the lease ratio to 95%.
GLP CEO Ming Mei says the transaction is an accretive opportunity for the company that allows it to strengthen its US market presence and growth prospects with minimal incremental overhead. “The fund management platform is one of GLP’s main sources of capital to fund our growth,” he points out in the statement. “The fund syndication offering for our first US income fund was significantly oversubscribed. Building on the positive momentum, we remain confident of injecting this portfolio into our fund management platform by April 2016.”
