Over the past two years, GLP and partners have agreed to buy over $13 billion worth of warehouse space via GLP’s fund management platform, including a deal this week to buy a $4.55 billion logistics portfolio in the United States.
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Following the acquisition, GLP’s global portfolio will increase to more than 500 million sq ft valued at approximately $33bn. GLP is aiming to increase that to 95 percent.
“The recent capital market incident has created some concerns among customers and we just want to take a more conservative approach”, chief executive officer Ming M. Mei told investors after reporting a 49 per cent year-on-year growth in global earnings to US$268 million during the April-June period, led by higher asset values and development gains.
That expanded GLP’s fund management platform by 36 per cent to US$27.1 billion. That deal, once completed in November, will make it the second-biggest US logistics owner after Prologis within one year of its entering the market.
While industrial vacancies across the U.S. are at their lowest in at least 15 years, that has yet to translate into “consistently large” rent growth as the supply of new buildings grows, Bradley Doremus, an associate at Reis, said in a July 15 report. “Our long-term outlook for China remains positive and we expect to be able to ramp up development activity in accordance with demand”.
GLP said it plans to provide $1.9 billion of equity for the purchase with cash on hand and existing credit lines.
The IIT Board of Directors has unanimously approved the deal, although stockholders of the non-traded REIT must also OK the transaction. IIT said in a prepared statement that it will also transfer 11 properties that are under development or in the lease-up stage to a liquidating entity, which will sell the excluded properties following the closing of the GLP deal to maximize the value for IIT’s stockholders.
The company will continue to operate the properties, which will increase assets under management to about $32 billion.
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The latest portfolio addition comes at a 5.6 per cent capitalisation rate, GLP said. “Against a backdrop of macroeconomic uncertainties, our strong results underscore the quality of our assets and reflect the outstanding work of our team”.
