Global Logistic Properties (GLP) is acquiring a US$4.55 billion (S$6.2 billion) portfolio in the United States, it announced yesterday.
The acquisition, from Industrial Income Trust, will enlarge its US footprint by 50 per cent to 173 million sq ft and see it leapfrogging Duke Realty to become the second-largest logistics property owner and operator in the US after Prologis - all within a year of its entering the market.
The 58 million sq ft acquisition portfolio is spread across 20 major markets, including Los Angeles, the Baltimore-Washington metropolitan area and Pennsylvania.
It was 93 per cent leased as at June 30, with a weighted average lease expiry of nearly 51/2 years.
The largest customers by leased area are Amazon at 4.6 per cent, Home Depot at 3.6 per cent and Ceva Logistics at 2.7 per cent.
GLP will inject the portfolio into its fund management platform. It will initially own 100 per cent on closing by Nov 16 but will pare down its stake to 10 per cent by April next year, it said yesterday.
"Demand from major institutional investors to invest with GLP in US logistics real estate is strong, with GLP in negotiations with several new and existing capital partners," GLP chief executive Ming Mei said yesterday.
The transaction will allow GLP, which counts Singapore sovereign wealth fund GIC as its biggest investor, to participate in the US economic recovery, market watchers noted.
"It also (helps to give) their portfolio a more balanced split between emerging and developed markets, as they have been growing in China and Brazil while slowly selling down their Japan business to their Japan Reit," said Mr Wong Yew Kiang, senior research analyst at CLSA.
GLP has been rapidly expanding its fund management platform lately, deepening its presence in key markets while tapping third-party capital. Last week, it launched the US$7 billion China-focused CLF Fund II.
The increase in assets under management and potential gains from fund management fees will drive higher returns on equity in the medium term, said Mr Derek Tan, a DBS Group research analyst. "The ability to scale down its stake to 10 per cent is a bit of uncertainty that might overhang the stock, but should not be an issue, given the track record for their first US portfolio."
GLP's Mr Ming said the fund syndication offering for its first US income fund was "significantly oversubscribed". GIC reportedly holds a 45 per cent stake in the fund, GLP US Income Partners I, which has an US$8 billion portfolio or 115 million sq ft of logistics properties.
The latest portfolio addition comes at a 5.6 per cent capitalisation rate, GLP said. The acquisition will be funded from the US$2.3 billion cash that GLP holds and existing credit facilities. The room for e-commerce opportunities remains vast, GLP added. Supply of US industrial real estate remains well below historical levels.