GLP

GLP: UBS maintains Buy with $3.23 TP. House met with Jeff Schwartz (Deputy Chairman of the Board), Yoshiyuki Chosa (President of GLP Japan) and Genji Jacobs (Vice President of Asset Management) in Tokyo. The key objectives of the trip were to get an update on its Japan operations and leasing activity, glean insights into the potential divestment of the company’s House note that lifting of online drug sales ban will drive a new wave of space demand, as leasing enquiries are up 50% with strong interest from 3rd Party Logistics (3PL), retailers and manufacturers. Solid demand is also reflected in a 2.8% vacancy rate for multi-tenanted facilities in Tokyo, a historical low since 2004. Demand is already tight, but could see a new wave as online retailers strengthen networks and platforms for improved speed and quality of delivery following the lifting of a ban on online drug sales by Japan’s Prime Minister. Asset divestment to GLP J-REIT remains on management’s agenda The GLP-JREIT lock-up expires on 18 June, but as third-party appraisals and committee approvals could take a couple of weeks, news of the divestment may only be announced towards end-June/mid-July. Cap rates would not have compressed significantly; thus, the deal dynamics would likely reflect a balance between accretive J-REIT growth and enabling GLP to retain the option on asset reflation.