China’s sliding currency just could be creating a $6 billion opportunity for the owners of warehouse giant Global Logistic Properties.
The Singapore-based logistics developer announced to the Singapore stock exchange late Thursday that it has retained investment bank JP Morgan for a “strategic review” of its business following a request by its largest shareholder, Singaporean sovereign wealth fund GIC.
The announcement followed reports last month that a group led by China’s sovereign investment fund, CIC, was interested in acquiring the company and its 52 million square metres (560 million square feet) of warehouses spread across Asia and the Americas. If completed, the deal for the $6 billion warehouse developer would rank among Asia’s largest ever corporate takeovers.
Warehouse Developer Keeping Buyout Field Open
In a separate announcement to the Singapore exchange, GLP representative Julie Koh Ngin Joo noted that, “As part of the strategic review, the Company, through JPMorgan, is in the process of making preliminary approaches to various parties to evaluate the viability of options available for its business.” Bloomberg had reported nearly one month ago that CIC, together with a group including by mainland-based Hopu Investment Management and Hillhouse Capital Management had approached GLP about a potential buyout.
While CIC and its potential consortium partners are already investors in GLP’s mainland China operation, the warehouse developer appears to be keeping its options open at this point. In the announcement Koh asserted that, “The Company wishes to emphasise that no definitive transaction has been entered into by the Company with any party (including the investor group mentioned in the article in Bloomberg News).”
US Acquisitions Could Pay Off for GLP
GLP got its start in Asia in 2009 when the GIC-backed company bought the Asian assets of US warehouse platform Prologis when that company ran into tough times during the global financial crisis.
In recent years, however, the developer has acquired billions of dollars in US warehouses, as well as a growing portfolio of Brazilian assets, in an effort to diversify its holdings. Now the owner of the world’s second largest portfolio of warehouse properties, GLP’s expanded footprint could be attractive for CIC as the Chinese sovereign fund looks to improve on recent financial disappointments.
Last year CIC, which is entrusted with investing China’s foreign reserves, recorded a loss on its overseas investment – its first negative net annual return since 2011. In response to that loss, the fund – which is already China’s largest owner of overseas properties – vowed in July to put a greater emphasis on pursuing real estate opportunities.
With China’s renminbi having slid by nearly eight percent against the US dollar in the last 12 months that impetus for offshore deals should be even greater now than it was during the summer.
In July 2015 GLP bought $4.55 billion in North American warehouses from Industrial Income Trust Inc, and in September this year the Singapore-based firm added to that total by purchasing $1.1 billion in US distribution centres from San Francisco’s Hillwood Development. According to GLP, it now owns more than 16 million square metres of US warehouses valued at more than $12.9 billion.