CHICAGO /PRNewswire/ -- GLP, the leading global provider of modern logistics facilities, has entered into a definitive agreement to acquire a US$4.55 billion[2] US logistics portfolio from Industrial Income Trust ("IIT"). GLP intends to inject the portfolio into its fund management platform.
Expanding GLP's Fund Management Platform
GLP expects to own 100% of the portfolio upon closing by 16 November 2015 and pare down its stake to 10% byApril 2016. 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.
Transaction Generates Attractive Returns
The portfolio is to be acquired at a 5.6%[3] cap rate. GLP's target 10% equity stake of US$190 million is expected to generate compelling returns within the first year of investment. This includes GLP's share of operating results and fund management fees.
Mr. Ming Z. Mei, Chief Executive Officer of GLP, said: "This is an accretive opportunity for GLP that allows us to strengthen our US market presence and growth prospects with minimal incremental overhead. The fund management platform is one of GLP's main sources of capital to fund our growth. The fund syndication offering for our first US income fund was significantly oversubscribed. Building on the positive momentum, we remain confident of injecting this portfolio into our fund management platform by April 2016."
Funding
GLP's initial equity commitment (100% ownership day one) of US$1.9 billion[4] will be funded by cash on hand and existing credit facilities. GLP does not need to issue additional equity to fund this acquisition given GLP has US$2.3 billion of existing cash. GLP has approximately US$2.9 billion of committed long-term financing (~60% LTV) for the acquisition. Post this transaction, the US would represent 6%[5] of GLP's Net Asset Value.
GLP Becomes Second Largest Logistics Property Owner and Operator in the US
The portfolio, selectively aggregated through over 100 separate transactions over a period of five years, is one of the highest quality portfolios in the US. It comprises 58 million square feet ("sq ft") (5.4 million square meters ("sqm")) of state-of-the-art, in-fill logistics assets spread across 20 major markets. The largest markets include Los Angeles, Metro D.C. and Pennsylvania. The portfolio was 93% leased as of 30 June 2015, with a weighted average lease expiry of nearly 5.5 years. GLP is focused on increasing the lease ratio to 95%.
This transaction will enlarge GLP's US footprint by 50% to 173 million sq ft (16.1 million sqm), with GLP becoming the second largest logistics property owner and operator in the US within a year of market entry. GLP is also the largest provider of modern logistics facilities in China, Japan and Brazil. Subsequent to this transaction, GLP's global portfolio will encompass more than 500 million sq ft (47 million sqm) valued at approximately US$33 billion[6].
Mr. Stephen Schutte, Chief Operating Officer of GLP, said: "This transaction complements our existing portfolio well, expanding GLP's size and scale in the US. We feel particularly good about the quality and location of the facilities, which have an average building age of 15 years and a strong concentration in major distribution markets. We are excited about the synergies the combined portfolio is expected to generate and see upside potential from increasing occupancy and rents."
About GLP (www.glprop.com)
GLP is the leading global provider of modern logistics facilities. Its growth strategy is centered on being the best operator, creating value through developments and expanding its fund management platform. GLP's customers include some of the world's most dynamic manufacturers, retailers and third party logistics companies.
In July 2015, GLP entered into a definitive agreement to acquire a US$4.55 billion US logistics portfolio from Industrial Income Trust, with the intention of injecting the portfolio into its fund management platform. Upon closing of the proposed acquisition of IIT, GLP's U.S. footprint would expand to 173 million square feet (16.1 million square meters). Subsequent to this transaction, GLP's global portfolio would encompass more than 500 million square feet (47 million square meters) and approximately US$33 billion of assets under management worldwide. The Group is listed on the Mainboard of Singapore Exchange Securities Trading Limited (SGX stock code: MC0.SI; Reuters ticker: GLPL.SI; Bloomberg ticker: GLP SP).
GLP Investor Relations & Media Contact:
Ambika Goel, CFA
SVP- Capital Markets and Investor Relations
Tel: +65 6643 6372
Email: [email protected]
This press release is not an offer of securities for sale or a solicitation of an offer to purchase securities. The information in this press release may not contain, and you may not rely on this press release as providing, all material information concerning the condition (financial or other), earnings, business affairs, business prospects, properties or results of operations of GLP or its subsidiaries. Please refer to our unaudited financial statements for a complete report of our financial performance and position. This release may contain forward-looking statements that involve risks and uncertainties. Forward-looking statements include statements regarding the intent, belief and current expectations of GLP or its officers with respect to various matters. When used in this press release, the words "expects," "believes," "anticipates," "plans," "may," "will," "should," "intends," "foresees," "estimates," "projects," and similar expressions, and the negatives thereof, are intended to identify forward-looking statements. Similarly, statements that describe objectives, plans or goals also are forward-looking statements. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, availability of real estate properties, competition from other companies and venues for the sale/distribution of goods and services, shifts in customer demands, customers and partners, changes in operating expenses, including employee wages, benefits and training, governmental and public policy changes, and the continued availability of financing in the amounts and the terms necessary to support future business. You are cautioned not to place undue reliance on these forward-looking statements, which are based on the current view of management on future events and speak only as of the date of this press release. GLP does not undertake to revise forward-looking statements to reflect future events or circumstances. No assurance can be given that future events will occur, that projections will be achieved, or that GLP's assumptions are correct.
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[1] |
Year one cash NOI yield based on purchase price |
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[2] |
Subject to transaction costs |
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[3] |
Year one cash NOI yield based on purchase price |
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[4] |
Includes estimated transaction costs |
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[5] |
Pro-forma NAV assuming GLP's 10% equity stake in both GLP US Income Partners I (in contract) and Industrial Income Trust portfolio (under negotiation) |
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[6] |
Pro-forma portfolio valuation based on GLP's reported financials as of 31 March 2015 |