GLP

GLP is acquiring its third US portfolio for US$1.1b from Hillwood Development, a premier property developer founded by the son of Texas billionaire and former US presidential candidate Ross Perot.

Post acquisition, GLP will become the second largest logistics property owner and operator in US after Prologis and increase the number of assets under its portfolio by 32 to 1,434.

The portfolio comprise 15m sf of gfa with facilities in Atlanta, Chicago and Los Angeles which are riding on the e-commerce growth. Its biggest customers include household names like Amazon, Home Depot and FedEx.

The deal will take place in phases. An initial US$700m of the portfolio, comprising 10m sf of newly built and fully occupied logistics facilities, will be acquired in Dec '16, while the remaining US$400m will be acquired in phases upon completion and full lease-up.

GLP will be the asset manager of these assets, and intends retain ~10% in the portfolio post-syndication.

The purchase will be funded by US$470m equity and US$635m debt. The US$47m equity is expected to generate 13% ROE in the first year of investment.

That said, a foreign broker opines that the deal is a marginal accretive, as the portfolio is small in scale (US$1.1b vs existing US$13b US AUM). The 5.7% cap rate of the deal is also slightly lower than current portfolio at 5.9%.

The street currently has 11 Buys, 3 Holds and 2 Sells on the logistics counter with TP of $2.19.