Here’s what analysts have to say about GLP’s maiden US foray

The deal is only marginally accretive at first.

Global Logistic Properties last week revealed that it is taking a 55% stake in the $10b ($8.1b) acquisition of IndCor Properties. The joint venture with sovereign wealth fund GIC represents GLP’s first foray into the United States.

According to CIMB, while the US is a new developed market for GLP, the group’s strategy to keep
its stake to 10% of group net asset value should not detract from its well-touted focus and prospects in the high-growth China market that should remain the largest, at 60% of NAV.

“We think that the foray into the US is also timely as incoming supply is low and net demand has been positive in the past 18 quarters. This, coupled with low industry vacancy rate, should drive rental growth. The latest reversions are 13% higher over preceding levels. More importantly, although this deal is marginally earnings accretive initially, there is potential upside from boosting operational performance, optimising tax and cost efficiencies, fee income and ROE in the longer term. Its AUM should get a significant boost by almost doubling to US$21.3bn post-transaction,” noted CIMB.

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