SINGAPORE -- Singapore-based logistics provider Global Logistic Properties announced Tuesday that it was acquiring a $1.1 billion U.S. logistics portfolio from Hillwood Development Company, expanding its reach in America.
The portfolio totaling 1.4 million sq. meters would help to solidify GLP's position as "the second largest owner and operator of logistics facilities in the U.S.," the company said. It would expand GLP's U.S. footprint to 17 million sq. meters, which in total would make 8% of GLP's net asset value.
GLP aims to complete the deal for fully leased properties in December this year, worth $700 million. The remaining $400 million are for properties in development that will be acquired in phases.
The transaction would be funded by $470 million of equity and $635 million of debt. GLP intends to retain only 10% of the portfolio and expects to sell on the rest to institutional investors. The company expects to generate a 13% return-on-equity including fees in the first year of investment. It also said that it would fund its equity commitment with cash and existing credit facilities.
GLP has been building its key market in China as e-commerce grew rapidly in the country and boosted demand for logistics centers. Its China facilities make up 57% of its total net asset value, followed by 25% in Japan. Apart from the U.S., its next biggest holdings are in Brazil.
But as China's growth slows, GLP is ramping up investments in more mature markets such as the U.S. For its financial year ending in March 2017, GLP budgeted only $1.4 billion for new developments in China, a 17.6% fall from the previous financial year.
GLP, together with Singapore's sovereign wealth fund GIC, entered the U.S. in 2015 with a whopping $8.1 billion acquisition from private equity fund Blackstone Group. Most of GLP's stakes were eventually sold to institutional investors from Asia and North America. The landmark deal was followed by the purchase of a $4.55 billion U.S. portfolio through a second U.S. property fund established with China Life and other institutional investors. Through these acquisitions, GLP quickly became the second largest owner and operator of logistics facilities in the U.S.
GLP also sees a similar trend in Japan for an increase in demand for large-scale warehouses. It is currently growing its market share in the country. In June, it announced an investment of 23 billion yen ($210 million) to build a warehouse facility in the Ibaraki Prefecture. The company also announced on Monday it was developing a 27,000 sq. meter modern logistics property in Osaka. The $49 million development is expected to be completed around April to June 2018.