GLP to Raise S$3.2 billion in Asset Sale to Japanese REIT

Global Logistic Properties Limited (GLP), a provider of modern logistics facilities, said Thursday it will contribute 30 of its properties in Japan to a real estate investment corporation (J-REIT), which will be focused on owning and operating logistics facilities in Japan.

The initial consideration for the contribution will be approximately JPY209 billion (SS$3.2 billion), in-line with the appraised value of the properties.

“This is a very significant transaction for GLP. It is consistent with several key elements of our strategy, recycling capital to fund expansion in high-growth markets and growing our strong fund management platform,” said Jeffrey Schwartz, Deputy Chairman of GLP.

“The transaction will drive long term shareholder value as it monetises a considerable proportion of our portfolio and will generate stable recurring income for the group, diversifying our earnings base. Japan remains a highly attractive market for GLP, with favourable demand and supply dynamics,” he added.

Net cash proceeds from the sale are estimated to be approximately JPY100 billion, which GLP intends to use primarily for investment in China and Japan.

As sole sponsor, GLP will act as the property and asset manager of the J-REIT. Accordingly, it will receive asset and property management fees, as well as fees arising from the subsequent acquisition and disposition of properties.

“The J-REIT will provide the company a continuing income flow with recurring fee income arising from fees payable to the asset management company and recurring distribution income arising from the unit holding interest in the J-REIT,” GLP said in a statement.

The 30 properties being contributed to the J-REIT have attributable net profits of approximately US$102 million, representing around 23.1 per cent of GLP’s consolidated net profits.

This excludes incremental asset and property management fees and dividend income which will be earned by GLP.

Analysts said the move may be in line with GLP’s plan for an IPO that could raise at least JPY100 billion in the first IPO for a real estate trust in Japan in five years.

Sources said GLP has hired Citigroup Inc, Goldman Sachs and Nomura Holdings as the main underwriters for the IPO.

GLP currently has 68 wholly-owned logistics facilities in Japan and another 15 logistics facilities are owned in a joint venture.

The group raised S$3.5 billion in October 2010 in what was at the time Singapore’s biggest IPO since 1993.

GLP shares edged up 3.5 percent to S$2.66 at Thursday’s close, the highest since September 13.