Business Times: Tue, Dec 20
(SINGAPORE) Global Logistic Properties (GLP) has entered into a joint venture with Chinese sovereign wealth fund China Investment Corp (CIC) to acquire 15 logistics facilities in Japan for 122.6 billion yen (S$2.1 billion), making it one of the largest property transactions Japan has seen in the last few years.
The JV will see each side take a 50 per cent stake, and GLP and CIC will each fork out an initial equity investment of 21.22 billion yen. GLP said it will fund its equity commitment from internal capital. It will also act as manager of the JV, providing asset and property management services.
The remaining 80 billion yen will be funded through debt. Already, the JV has secured debt financing from a group of Japanese banks.
The portfolio of 15 properties, to be acquired from LaSalle Investment Management, has a gross floor area of 770,989 square metres, of which 90 per cent is located in Greater Tokyo and Osaka. LaSalle Investment is the real-estate investment management arm of Jones Lang LaSalle.
The acquisition comes after GLP earlier this year won exclusive negotiating rights to buy a portfolio of logistics properties owned by LaSalle Investment and worth as much as 140 billion yen. LaSalle Investment was said then to be selling a portfolio of more than 20 industrial properties in Japan.
GLP deputy chairman Jeffrey Schwartz said that GLP and CIC are buying the properties at a 'very good price' and that 'the transaction will be accretive to GLP from day one'. The transaction would have lifted GLP's fiscal 2011 profit after tax and minority interests by US$38 million, had it been completed on April 1, 2010, said GLP.
The 15 properties were valued at 134.83 billion yen by an external valuation commissioned by GLP as at October 2011, said the group, which owns warehouses in China and Japan. Together, the properties have an occupancy rate of 98.3 per cent, with the majority of tenants being third-party logistics providers and e-commerce customers.
The weighted average lease expiry is 5.6 years, which, together with the occupancy rate, points to 'stable and visible cashflow', said GLP.
The firm has been actively growing its fund management platform this year after it was released from a non-compete agreement with US-based warehouse facilities owner ProLogis, which prevented it from expanding in Japan.
In September, it said it was teaming up with Canada Pension Plan Investment Board to form a US$500 million JV that would develop logistics facilities in Japan.
In a presentation issued yesterday, GLP said it 'will continue to grow its market presence in Japan and look to recycle capital in the market', adding that its equity exposure to Japan will remain stable, or may even go down, over time.
Japan's property market has been attracting investors despite the earthquake, tsunami and nuclear crisis that hit the country in March. Many see the yen as a safe haven, and believe there is potential upside in Japan's property market.
Japan also has seen a surge in demand for modern logistics facilities as firms take the opportunity to move out of the older and, in many cases, obsolete warehouses that suffered more damage during the earthquake, noted property consultancy firm CB Richard Ellis (CBRE).
Yesterday, GLP's shares fell one cent to $1.64.
Source: Business Times