GLP raises $334m in follow-on

Demand for GLP J-Reit, which has a portfolio of 30 logistics facilities in Tokyo and Osaka, allowed the issuer to price units at a 2% discount to August 18's closing price.
GLP J-Reit has 30 logistic properties in Tokyo and Osaka
GLP J-Reit has 30 logistic properties in Tokyo and Osaka

The Japanese real estate investment trust of Singapore-listed Global Logistic Properties GLP raised Y34.5 billion ($334 million) in a follow-on offering on Wednesday.

GLP J-Reit, which has a portfolio of 30 logistics facilities in Japan, mostly in Tokyo and Osaka, sold 168,493 units in an international tranche and 124,538 to Japanese investors, according to a term sheet. All of the units on offer were primary.

Demand from both tranches allowed the issuer to price the units at Y113,827 each, representing a 2% discount to the August 18 closing price of Y118,300, a source close to the deal told FinanceAsia.

The initial discount range was 2% to 4.5% to the August 11 closing price of Y114,100. A 10% greenshoe option, if exercised, will add an additional 22,644 units.

There was also a designated purchaser, GLP Capital Japan II Private Limited, a subsidiary of Global Logistic Properties, which agreed to purchase 49,955 units, the source said.

Shares in GLP J-Reit are up 14% so far this year, with its dividend yield currently at 3.16%, according to Bloomberg. This is in the middle of its comparables; Industrial & Infrastructure Fund Investment and Japan Logistics Fund, two J-Reits that focus on the logistics facility business.

Industrial & Infrastructure Fund Investment has a dividend yield of 3.72%, while Japan Logistics Fund has a dividend yield of 3%.

At the time of its listing two years ago, GLP J-Reit’s dividend yield was forecast to be about 7%, compared with the J-Reit industry average of about 5%.

The high-dividend yield at the time of GLP J-Reit’s listing was attractive to investors, although the structure is not resilient to unexpected events, such as the 2011 Tohoku earthquake.

Rebound in Japan

Both Industrial & Infrastructure Fund Investment and Japan Logistics Fund have returned 9% this year to August 20, while shares in GLP J-Reit are up 14%. All three have experienced recent spikes in performance since mid-August as global investors return to Japanese equities.

A Bank of America Merrill Lynch survey released two weeks ago indicates that 30% of global investors are overweight Japanese equities, the highest allocation in seven months, and an increase from 26% in July, 21% in June and 7% in May. Investors have favoured technology, industrials and automotive sectors.

The survey suggests global investors are confident enough to invest in Japan in spite of poor performance this year. The Nikkei 225 is down 5% year-to-date.

Citi, Goldman Sachs Japan and Nomura acted as joint global coordinators on the deal, with the three banks working on both the international tranche and the domestic Japanese tranche.

Bank of America Merrill Lynch and JP Morgan also worked on the international tranche, while SMBC Nikko Securities participated on the Japanese portion.

GLP J-Reit raised $1.28 billion in a Tokyo initial public offering in December 2012, with the Reit pricing 1.7 million units at Y60,500 each, the top of its initial Y59,500 to Y60,500 per unit range.

It was the second largest IPO in Japan that year, after Japan Airlines raised $8.5 billion in September. GLP J-Reit was also the fourth Reit to list in Tokyo in 2012. Only three Reits exceeded the $1 billion mark since — Nippon Prologis Reit in February 2013, Nomura Real Estate Master Fund in June 2013 and Aeon Reit Investment Corp in November 2013, according to Dealogic.

GLP J-Reit’s portfolio of buildings was valued at $2.6 billion at the time of its listing.

In November 2012, Global Logistics Properties raised S$414.4 million ($339 million) from a new share sale to fund its share of an acquisition of logistic properties and developments in Brazil. GLP’s portfolio was previously split between high-growth assets in China and more mature logistics facilities in Japan.

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