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GLP acquires US$4.6b logistics portfolio in US, becomes second largest US logistics property player
GLOBAL Logistic Properties (GLP) is acquiring a US$4.55 billion logistics portfolio in the US in a deal that will propel the firm to become the second largest logistics property player there within a year of entering the market.
The portfolio - comprising 58 million square feet of logistics assets across 20 markets such as Los Angeles, Metro DC and Pennsylvania - from Industrial Income Trust will be injected into its fund management platform, GLP said.
The firm will fully own the portfolio upon completion of the transaction by Nov 16, and pare its stake to 10 per cent by April next year. This smaller equity stake of S$190 million is expected to generate "compelling returns" within the first year, including GLP's share of operating results and fund management fees.
GLP's initial equity commitment of US$1.9 billion will be funded by cash on hand and existing credit facilities.
Demand from major institutional investors to invest with GLP in US logistics real estate is strong, the firm said, adding that it is in negotiations with several new and existing capital partners.
The transaction will enlarge its footprint in the US by 173 million square feet, and comes shortly after GLP's entry into the country; GLP first moved into the US industrial market in February after teaming up with Singapore sovereign wealth fund GIC to buy Blackstone Group's IndCor Properties Inc for US$8.1 billion.
Said GLP CEO Ming Z Mei: "This is an accretive opportunity for GLP that allows us to strengthen our 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.
"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."
The portfolio was 93 per cent leased as at June 30, with a weighted average lease expiry of nearly 5.5 years. GLP said it will focus on increasing the lease ratio to 95 per cent.
GLP will fund the initial equity commitment of US$1.9 billion through its US$2.3 billion of cash reserves and existing credit facilities; it has about US$2.9 billion of committed long-term financing for the acquisition.
After the transaction and its stake being pared down to 10 per cent, the US would represent 6 per cent of GLP's net asset value.