• Leasing momentum continues
• Completes US acquisition
• Fund syndication over-subscribed

New leases to major players in China and Brazil

GLP recently reported new leases totaling 63k sqm in China with four customers who are leaders in the e-commerce, packaged foods and pharmaceutical industries, and that three will be multi-location customers. We believe this points to steady leasing momentum in China where growing domestic consumption continues to drive demand for modern logistic facilities. In addition, GLP also signed pre-lease agreements for 97k sqm in Sao Paulo, Brazil, with three new customers. Sequoia Logistica, a third-party logistics provider, pre-leased 61k sqm at GLP Embu which will now be 100% pre-committed before its Sep-15 completion. Sanofi, a global pharmaceutical player, and Medley, a member of the Sanofi group, also pre-leased 36k sqm at GLP Guarulhos to establish its largest distribution center in Latin America.

Completes acquisition of US$8.1b US logistics portfolio

GLP also completed the acquisition of its US$8.1b logistics platform in the US and expects to pare down its current 55% stake to ~10% by Aug-15 through a fund syndication exercise. We understand that the syndication is currently over-subscribed with several investors in advanced stages of due diligence. The US portfolio is 91% leased as at 31 Jan 2015, and comprises 11m sqm of high quality logistics properties in locations with high barriers to entry. Given the quality of the assets and improving market fundamentals in the US, the group expects to increase the lease ratio and capture positive leasing spreads ahead. We are positive on this acquisition which will enable GLP to establish scale rapidly in the US and is aligned with the group’s strategic direction of operating in prime markets and growing the fund management platform.

Maintain BUY with S$2.99 FV

We continue to like GLP for its leading position in key markets with positive e-commerce trends and growing demand for logistics facilities. As at end Dec-14, the group also sits on a healthy balance sheet with a net cash position. Maintain BUY with an unchanged S$2.99 fair value estimate.

Source: OCBC Research - 13 Mar 2015