Global Logistic Properties (GLP) has bought a 53% stake in Airport City Development (ACD), the sole developer of the airside cargo handling and bonded logistics facility at Beijing airport for a net price of around $375 million.
GLP owns, manages and leases logistics facilities in China and Japan. Its properties are strategically located within key logistics hubs, transportation hubs or industrial zones in metropolitan areas such as Shanghai, Tianjin, Guangzhou, Tokyo and Osaka. GLP was spun off from the Government of Singapore Investment Corp (GIC), one of the city-state’s two sovereign wealth funds, last year. In October GLP raised S$3.97 billion ($3.0 billion) from Singapore’s largest initial public offering since 1993. Citi and J.P. Morgan were global coordinators for the IPO, but GLP's Singapore Exchange filing categorically states that neither bank is involved in the current deal.
The properties GLP is now acquiring are its first air cargo facilities situated within an airport perimeter. Until now GLP’s air cargo properties have been located in the environs of airports, but beyond the perimeters.
The acquisition is being made in two stages. In the first stage GLP will pay Rmb1.4 billion ($213 million) to the two special purpose vehicles that own ACD. GLP will pay 30% of this amount in cash, to be funded from its IPO proceeds, and the balance 70% through the issuance of new GLP shares. The shares will be issued to the vendors at a price of S$2.1581 per share, which is equal to the five-day volume-weighted average price (VWAP) up to the date of the sale and purchase agreement.
In the second stage GLP will transfer some non-core, non-logistics assets valued at Rmb592 million back to the vendors. GLP will also dispose of six commercial and industrial land sites, which are deemed to be non-core land and properties, estimated to be worth another Rmb488 million. This amount will be paid by GLP to the vendors in instalments, with the payment and final amount being contingent on ACD receiving full payment for the remaining non-core assets to be sold after closing.
So, in total GLP is paying Rmb2.5 billion for the 53% stake in ACD. The deal structure is intended to ensure GLP is not exposed to too much risk related to the disposals, as it is not obligated to pay the vendors until it has realised cash from the disposals.
GLP is acquiring 17 completed properties with a net leasable area of around 280,000 square metres and 26 development properties with a net leasable area of 513,000 sqm. Together with GLP’s existing properties in Beijing of approximately 170,000 sqm, GLP will have a gross floor area of close to 1 million sqm in Beijing. The deal is accretive for GLP’s net tangible assets from day one.
