Why Global Logistics Properties' Japan asset monetisation is good move

GLP JREIT has been c.30% above IPO price.

According to CIMB, GLP’s 3Q13 saw a substantial ramp up in development starts and land acquisitions in China, a sign that excess capital will progressively be deployed into growth.

Its recent monetisation of a third of its Japan assets appears timely, mitigating the negative impact of a Yen decline. The 3Q13 result was in line with estimates at 22% of our full year forecast and 24% of consensus.

Here's more from CIMB:

9M13 core EPS formed 75% of our full year. We lower our FY13-15 core EPS on asset sales into the JREIT, but lift our RNAV-based target price on accretion from an enlarged China portfolio.

China continues to drive GLP’s results, with 3Q13 core EBIT up 14% yoy. More assets were completed with same store NOI up 8.7% yoy on a 89% occupancy.

GLP is guiding for a stronger demand outlook with e-commerce expanding once again in China. New and expansion leases signed in 3Q13 was 321.5k sq m, ahead of completions in the quarter.

Japan remains stable, with 98% occupancy and flats rents qoq. GLP was aggressive in 3Q13, acquiring 1.86m sq m of land in China, (YTD 3.86m sq m).

Its China portfolio has now grown by 32% yoy to 10.3m sq m, a sign of where excess capital from its JREIT will be deployed. Capex spend in China is expected to rise by 20-25% in the next 12 months.

China is now GLP’s largest segment at an estimated 52% of GAV. Development starts rose to 850k sq m in 3Q13 (YTD 1.6m sq m), and is on track to meet its target of 2m sq m.

While GLP is in no rush to monetise assets in China, we believe a recycling platform via private funds could eventually be established and provide a driver for further growth.

The sale of a third of its Japan assets appears timely, ahead of the ¥ decline. The JREIT proceeds are hedged at 88.5/1 US$ which is more favourable vs. current rates.

At 50% leverage, the impact on NAV is also cushioned via a natural hedge policy. Interestingly, the GLP JREIT has done well at c.30% above IPO price.

Also Read

One Sophia sells 30% of units at weekend launch

SLA launches tender to revitalise Tanjong Katong Complex

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

I want to download the media kit