GLP C-REIT Raises $260M to Buy Three Mainland Sheds as Deleveraging Questions Loom

GLP on Tuesday introduced the completion of a RMB 1.85 billion ($260 million) follow-on fairness providing by its China REIT to purchase three logistics services, as the economic specialist continues to flex its fundraising muscle regardless of analyst considerations about its debt load.

GLP C-REIT issued 438 million shares on the remaining supply worth of RMB 4.228 per unit, the highest finish of the preliminary vary offered, GLP Capital Partners stated in a launch.

The proceeds might be used to purchase a trio of belongings developed by the belief’s sponsor — specifically GLP Park Qingdao Qianwan Port, GLP Park Jiangmen Heshan and GLP Chongqing Urban Distribution Logistics Centre — increasing the portfolio to 10 belongings with a complete leasable space of 1.16 million sq. metres (12.5 million sq. toes).

The recent capital elevate comes after Fitch Ratings final month positioned Singapore-headquartered GLP on “rating watch negative” for what the company referred to as “uncertainty in GLP’s deleveraging effort via asset monetisation”, referring to the group’s plan to promote a majority curiosity in its Chinese logistics portfolio.

Changing Business Mix

Led by co-founder and CEO Ming Z Mei, GLP grew to become the primary worldwide firm to checklist a REIT in China when it teamed with mainland funding financial institution CICC to launch GLP C-REIT in June 2021. The logistics big raised RMB 5.85 billion by means of the itemizing of GLP C-REIT, whose current seven-asset portfolio spans greater than 700,000 sq. metres of gross ground space.

The belief’s high asset is GLP Beijing Airport Logistics Park, a 130,540 sq. metre facility valued at RMB 1.68 billion with an occupancy price above 96 % as of March.

In Fitch’s May commentary, the rankings company stated GLP’s credit score metrics deteriorated in 2022 as the a number of of web debt to recurring EBITDA rose to 12 occasions from a stage of seven occasions in 2021.

Fitch expects declines in GLP’s logistics rental revenue to speed up after the disposal of its Chinese logistic belongings, with the rising contribution from information centres, chilly storage and payment revenue to impact a “material change” within the firm’s enterprise combine.

“A lack of progress in its asset monetisation and deleveraging plan or significant deterioration in its business profile after the transaction could lead to negative rating action,” the company stated.

Bloomberg reported that GLP’s investment-grade greenback bonds have been the worst performers in Asia this 12 months and danger being downgraded to junk territory.

Investor Confidence

GLP C-REIT’s newest milestone comes proper on the heels of a hefty fairness providing for GLP J-REIT by which the Tokyo-listed belief goals to elevate JPY 30.9 billion ($220 million) for the acquisition of three warehouses and a 30 % stake in a fourth shed.

In a primary for a Japanese REIT, the belief has put aside a devoted portion of the fairness providing to goal high-net-worth traders, who will contribute JPY 10 billion in the direction of the fundraising.

“We are delighted that our global offering has attracted substantial interest from a diverse range of investors, including notable institutional investors from Japan and abroad,” stated Yoshiyuki Miura, president of GLP J-REIT’s supervisor.

The 4 incoming belongings, which embody two on the primary island of Honshu and one every on Kyushu and Okinawa, have been developed by sponsor GLP and can add 269,487 sq. metres of gross ground space to the $6 billion belief’s portfolio.