Global Logistic Properties

Kim Eng on 12 Mar 2012

Background: Global Logistic Properties (GLP) is a market leader in developing, owning, managing and leasing logistics facilities in China and Japan. It has a presence in 25 Chinese cities with 10.4m sqm of GFA, and seven cities in Japan with 3.6m sqm of completed GFA. The Government of Singapore Investment Corporation (GIC) owns a 50.6% stake in GLP.

Recent development: Media reports have suggested that GLP is looking to list some of its Japanese assets in Tokyo as a REIT in an IPO that could raise US$1b. Management clarified that while it is studying various options, no decision has been made.


Opportunity to recycle capital in Japan. GLP joined hands with China Investment Corporation (CIC) last December to acquire a portfolio of 15 logistics assets from Lasalle Investment Management in a US$1.6b deal. These properties, however, are not expected to be the seed assets for the potential IPO. In our view, an IPO would free up capital to be redeployed into China, which should see stronger growth. It will also allow GLP to build up its fund management expertise.

China still an attractive growth market. Despite Beijing recently lowering its 2012 GDP growth forecast to 7.5%, we believe that the economic restructuring will spur domestic consumption, and hence lead to continued strong demand for GLP’s warehousing space. Currently, e-commerce operators Amazon and Vancl are among its top three tenants in China. Bain & Company estimates that online shopping in China will grow at 48% pa from 2010 to  RMB1.5t next year, potentially overtaking the US as the world’s largest e-commerce market. This should fuel demand for modern logistics facilities.

No lack of capital. As at last December, GLP has a cash position of US$1.8b with net gearing of 0.33x. Proceeds from the potential IPO could further fund the capex needed to grow in China. In addition, GLP is one of the first Singapore-listed companies to tap on the demand for perpetual securities, raising S$750m from the issue of 5.5% perpetuals last December and this January. As its properties are long-term assets, this should provide for better asset-liability management.