GLP prices $1.3 billion Japan Reit IPO

GLP J-Reit, with an initial portfolio of 30 logistics facilities in Japan, will be the second biggest offering in the country this year when it starts trading on December 21.
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GLP J-Reits 30 logistic properties are mostly in Tokyo and Osaka
<div style="text-align: left;"> GLP J-Reits 30 logistic properties are mostly in Tokyo and Osaka </div>

The Japanese real estate investment trust of Singapore-listed Global Logistic Properties (GLP), an owner of logistics properties, is set to raise ¥105.7 billion ($1.28 billion) from its initial public offering after fixing the price at the top of the indicative range.

GLP J-Reit’s initial portfolio comprises 30 logistics facilities in Japan — most in Tokyo and Osaka — valued at $2.6 billion, with an option to buy three additional assets during the next few years.

At $1.28 billion, it is set to be the second-biggest IPO in Japan in 2012 after Japan Airlines raised $8.5 billion from its offering in September, according to Dealogic. It is also the fourth Reit to list in the country this year, up from zero last year, and the biggest of the four. The amount raised by Japanese companies’ IPOs stands at $12.7 billion year-to-date, a sharp jump from the $1.9 billion raised during the same period last year, the data show.

What is notable about GLP J-Reit’s deal is its dividend policy, a Tokyo-based analyst said yesterday. Its dividend yield is expected to be about 7%, compared to the J-Reit industry average of about 5%. Unlike its peers in the country, the trust will calculate property depreciation as part of its dividend payouts, the person said.

The high dividend yield will be attractive to some investors, though some may feel the structure is less resilient to unexpected events such as the 2011 earthquake, the source also noted.

GLP J-Reit is offering 1.747 million units at ¥60,500 each, set to raise $1.28 billion. The indicative price range was between ¥59,500 and ¥60,500. There is an over-allotment option of an additional 87,400 units, which could increase the size to $1.35 billion.

As a result of the bookbuilding, which ended on Monday (December 10), 55.4% of the deal is now set aside for domestic investors, while the remaining 44.6%, will go to international investors, according to a filing by the company yesterday. Initially, 63.2% of the deal was intended for investors in Japan and the rest for investors overseas.

After the pricing yesterday, the subscription period starts today (December 13) and will last until December 18. The listing is scheduled for December 21.

Just last month, GLP raised S$414.4 million ($339 million) from the sale of new shares to fund its share of an acquisition of logistic properties and developments in Brazil. Prior to the move, GLP’s portfolio had been split between high-growth assets in China and more mature logistics facilities in Japan.

GLP will retain about a 15% stake in the J-Reit after the IPO.

The offering comes at a time when the stagnated IPO market in Japan is picking up, and a series of listings by Reits this year seem to be part of that general trend, another analyst said.

For comparison, investors likely look at other listed-J-Reits that also focus on the logistics facility business such as Industrial & Infrastructure Fund Investment and Japan Logistics Fund. They have an annualised dividend yield of between 4.5% and 5%, according to the Tokyo Stock Exchange’s website.

Citi, Goldman Sachs and Nomura were joint global coordinators for the deal.

The benchmark Nikkei 225 rose 0.6% yesterday, taking its year-to-date gain to about 13.3%.

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