GLP targets $321 million in share sale

Books opened for a 293 million share sale in GLP J-Reit, which has a portfolio of 30 logistics facilities in Tokyo and Osaka.
GLP J-Reit's portfolio primarily consists of logistics facilities in Tokyo and Osaka
GLP J-Reit's portfolio primarily consists of logistics facilities in Tokyo and Osaka

The Japanese real estate investment trust of Singapore-listed Global Logistic Properties GLP aims to raise up to ¥32.8 billion ($321 million) in a share sale.

GLP J-Reit, which has a portfolio of 30 logistics facilities in Japan, mostly in Tokyo and Osaka, will sell up to 293,000 units with the discount ranging between 2% to 4.5% to the August 11 closing price of ¥114,100, according to a term sheet by FinanceAsia. Bankers began taking orders on Friday.

Of the shares on offer, 57.5% will be available to international institutional investors, with the Japanese tranche making up the remainder, the term sheet said. Bank of America Merrill Lynch, Citi, Goldman Sachs Japan and Nomura are leading the deal, with pricing scheduled for August 20.

Shares in GLP J-Reit are up 11% so far this year up to August 15, with a dividend yield of 3.27%, according to Bloomberg. This is in the middle of its comparables, which include Industrial & Infrastructure Fund Investment and Japan Logistics Fund, two J-Reits that focus on the logistics facility businesses.

Industrial & Infrastructure Fund has a dividend yield of 3.68% and is flat year-to-date, while Japan Logistics Fund has a dividend yield of 3.12% and is up 7% so far this year.

At the time of its flotation nearly two years ago, GLP J-Reit’s dividend yield was forecast to be around 7%, compared to the J-Reit industry average of around 5%. The high-dividend yield at the time of GLP J-Reit’s listing was attractive to investors, although the structure is less resilient to unexpected events, such as the 2011 Tohoku earthquake.

GLP J-Reit raised $1.28 billion in its Tokyo initial public offering in December 2012, with the Reit pricing 1.7 million units at ¥60,500 each, the top of the ¥59,500 to ¥60,500 per unit range.

It was the second biggest IPO in Japan that year, after Japan Airlines made a rebound from its bankruptcy and raised $8.5 billion in September. GLP J-Reit was also the fourth Reit to list in Tokyo in 2012. Only three Reits have surpassed $1 billion 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 data.

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

One month before the Tokyo flotation, GLP 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 had previously been split between high-growth assets in China and more mature logistics facilities in Japan.

It’s been a rocky year in Tokyo. The benchmark Nikkei 225 is down 6% year-to-date, although the tides may be turning. A Bank of America Merrill Lynch survey released last week indicates that 30% of global investors are overweight Japanese equities, the highest allocation in seven months, and up from 26% in July, 21% in June and 7% in May, with investors favouring technology, industrials, and automotives.

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