Global Logistic Properties Ltd Is Betting Big On USA

Global Logistic Properties Ltd (SGX: MC0) made a big entrance into the US logistic properties market in 2015 when it purchased US$4.55 billion worth of real estate assets. Back then, its key markets were only China, Brazil, and Japan.

In terms of completed area, Global Logistic Properties’ US portfolio is now its largest, standing at 16.0 million square metres of ready-to-use area.  In contrast, the company only has 15.2 million sqm of completed space in China.

But, it seems that Global Logistic Properties is looking to further increase its presence in the US. The company announced yesterday that it will be buying US$1.1 billion worth of properties in the country.

The purchase would give Global Logistic Properties 1.4 million sqm of additional space, which is an increase of 8.7% in the company’s US portfolio. The acquisition is also expected to generate a 13% year one return on equity for the company.

The deal would see the logistics facilities company purchasing a US$700 million portfolio first by December 2016. The company would then acquire the remaining US$400 million worth of development projects in stages after they are completed and leased.

The US$700 million portfolio is currently 100% leased and has a weighted average lease to expiry (WALE) of nine years. The largest tenant in the US$700 million portfolio (by leased area) is Amazon, the US-based online retailer. The five largest tenants collectively account for 75% of the total leased area.

According to Global Logistic Properties, the purchase would be financed with US$470 million in equity and US$635 million in debt. However, it is only funding US$47 million for the equity portion with its cash on hand and is looking for capital partners to provide the rest of the equity.

Foolish Summary

Global Logistic Properties was predominantly only in three markets before 2015. But, within a short span of two years, the company has established a big presence in a new market, the US. With its latest acquisition, Global Logistic Properties has indicated that it would want the US to be another key market for its business for the long term.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own shares in any companies mentioned above.