GLP

GLP: Completed the first investment tranche of its landmark agreement with the Chinese consortium, which includes Bank of China, China Life and HOPU Funds. Recall, the first investment tranche was for the subscription by the consortium of 1,316.3m new shares at US$1.48b in GLP’s wholly-owned Chinese subsidiary, GLP China, and 74.3m new GLP shares (~1.5% dilution) at $2.755 a piece. The consortium is expected to complete the second investment tranche in GLP China within the next six months, which would involve another US$875m equity investment into GLP China. This will give the consortium a 30.3% stake in GLP China. We see the strategic move by GLP as a positive given the formal SOE connections, the group may now have better access to land and customers to further its China ambitions. Following the agreement with the consortium in Feb, GLP has raised its FYMar15 target of development starts in China from 20% to 30-40% y/y growth. Meanwhile, the consolidation of GLP’s China business into one holding company provides a convenient platform should the unit consider a future listing in China. Recall, GLP successfully monetized its Japan property assets via a spin-off of GLP J-REIT in Dec ’12. At $2.73, GLP is valued at 1.2x P/B and a 21% discount to consensus RNAV of $3.45. The counter remains a key constituent in Market Insight’s model Growth portfolio.