Excerpts from analyst's report


OCBC analyst: Eli Lee


GLP Japan Dev VentureGLP Japan Development Venture focuses on building modern, large-scale logistics facilities in the Greater Tokyo and Greater Osaka regions in Japan. Photo: Company ■ New 15k sqm lease in Japan

■ 2nd venture with CPPID


■ Sees firm demand in Japan


Signed new 15k sqm lease in Japan with Akachan House
GLP recently announced that it has signed a 15k sqm (161k sq ft) lease with Akachan House at GLP Narita in Greater Tokyo. Akachan House, a leading e-commerce retailer for baby products in Japan, will be consolidating its multiple operations in Greater Tokyo into GLP Narita, which will be used as a hub to support its same-day distribution needs in Japan.

GLP management indicates that domestic consumption in its key Japanese market (its second largest market behind China and constitutes 23% of the group’s NAV) remains healthy and that the group continues to see demand for its facilities as customers look to consolidate their operations within well-located facilities.

 

Maintain Buy with unchanged fair value estimate of S$2.68
EliLee6.15The JV is expected to commence construction of new projects in 2016 and its investment strategy allows for the entity to sell assets to GLP J-REIT, which will provide higher flexibility and more attractive returns.

-- Eli Lee (photo)

Established second Japan development venture with CPPIB
In addition, GLP announced in Feb 2016 that it has established a 50:50 JV, GLP Japan Development Venture II (GLP JDV II), with the Canada Pension Plan Investment Board (CPPIB).

This is the second venture established by these two groups after GLP Japan Development Venture I, which was launched in Sep 2011 and has since reached 92% of its investment capacity with US$2.4b of projects in various stages of development. GLP JDV II will initially be established with total equity commitments of JPY100b (US$873m), and its AUM is expected to reach US$2b over the next three years.

The JV is expected to commence construction of new projects in 2016 and its investment strategy allows for the entity to sell assets to GLP J-REIT, which will provide higher flexibility and more attractive returns.

GLP JDV II will also be seeded with GLP Nagareyama, a largescale logistics park in Greater Tokyo with 319k sqm (3.4m sq ft) of total GFA, which will be constructed in phases at a total investment cost of JPY59b (US$515m). Maintain BUY on GLP with an unchanged fair value estimate of S$2.68.



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