• Successful syndication of US portfolio
• To issue RMB1.5b of panda bonds
• Natural RMB hedge against CN assets

Successful syndication of US logistic portfolio

GLP announced this week that it will complete the syndication of its US logistic portfolio after the group agreed to syndicate a final 5.45% stake to a new co-investor for US$108m. As planned, together with three prior stake syndications, the group will ultimately retain a 10% stake in the US target portfolio after the process is completed.

To recap, GLP had acquired the US$8b logistics portfolio in the United States in Dec 2014 with the intention of injecting the assets into its fund management platform and ultimately paring down its holdings from 55% to 10% while GIC continues to hold a 45% stake.

The US logistics portfolio consists of 115m sq ft of high quality logistics assets in locations with higher barriers to entry, and 26 out of 29 markets have populations above 1m which are ideal for last mile e-commerce deliveries.

GLP China to issue RMB1.5b of panda bonds

In addition, the group also announced that it will be the first global logistics real estate company to issue RMB-denominated bonds, also known as panda bonds, on the Shanghai Stock Exchange. The group has regulatory approval to issue up to RMB10b of panda bonds and will first issue RMB1.5b of three-year tenor bonds at 3.12% per annum and five-year tenor bonds at 3.58% per annum.

We understand the bonds were more than 3 times oversubscribed and that the proceeds will be used for the repayment of existing debt and to fund business growth in China. We like that GLP’s management is executing strongly on its fund management platform strategy, which leverages on its relationships with major institutions and its facilities management capabilities, and is also developing and diversifying its capital sources for funding future growth.

In particular, panda bonds will provide a natural hedge in the group’s capital structure against its Chinese businesses and assets. Maintain BUY with an unchanged fair value estimate of S$2.37.

Source: OCBC Research - 15 Jul 2016