Global Logistic Properties

Global Logistic Properties: non-compete clause with potential rival ProLogis to end in Feb ’11, which could lead to stiffer competition for GLP, in its targeted China growth market. The clause was not specifically disclosed in the IPO prospectus, likely due to confidentiality agreement, but this means many investors who bought into the recent IPO would not have taken into account this impending development…

Prior to the 2008 sale of its properties, ProLogis was a leading player in the logistic facility business in China. It owned 20.7m sf of completed properties and properties under development, and 290 ha of land. It also had interests in 5 China JVs and one property fund, of which the firm's share aggregates to 4.4m sf. All were sold to GIC RE, which subsequently became GLP…

This may explain why GLP’s share price has been relatively flat, despite numerous recent Buy initiations from the Street. Expect negative knee jerk reaction as mkt players digest this news. Longer term however, it remains unclear how much of a threat Prologis is likely to be, hence GLP’s growth prospects still appear largely intact for now. Street target prices range $2.58-2.90.