Global Logistic Properties Ltd. is planning to raise 209 billion yen ($2.6 billion) from the sale of its Japanese warehouses to a real estate investment trust that it will partly own and manage.
The company, known as GLP, will sell 30 of its 68 Japanese logistic facilities to the real estate investment trust, the company said in a statement today. It will also allow the J-REIT, as they are known in Japan, to buy an additional three properties over the next three years, it said. The REIT will be granted a “right of first look” over the remaining 38 properties for a period of 10 years, GLP said.
The sale will help in GLP’s strategy of “recycling capital to fund expansion in high-growth markets and growing our strong fund management platform,” Jeffrey Schwartz, deputy chairman of GLP, said in the statement to the Singapore exchange. “It monetizes a considerable proportion of our portfolio and will generate stable recurring income for the group, diversifying our earnings base.”
An initial public offering for the property trust would be the biggest this year in the nation after the $8.4 billion share sale by Japan Airlines Co. A stock offering will be the largest by a REIT in Japan since Nippon Commercial Investment Corp. raised 121 billion yen in 2006, according to data compiled by Bloomberg. The Tokyo Stock Exchange REIT Index has climbed 27 percent this year, compared with the 2 percent gain in the broader Topix index.
GLP has operations in seven locations in Japan with a combined net asset value of $3.93 billion. It has properties in 29 cities in China with a net asset value of $3.65 billion as of June 30, it said. In December last year, the company teamed up with China Investment Corp. to buy 15 Japanese warehouses for 122.6 billion yen from LaSalle Investment Management.
GLP raised S$3.5 billion ($2.8 billion) in October 2010 in what was at the time Singapore’s biggest IPO since 1993. The company reported a 57 percent increase in profit to $153 million in its fiscal first quarter ended June, it said on Aug. 14. It will report second quarter earnings on Nov. 14.
Shares of Global Logistic increased 3.5 percent to S$2.66 at the close of trading in Singapore, the highest since Sept. 13. The gain added to the 52 percent advance this year, compared with the 14 percent increase in the Singapore benchmark Straits Times Index.