Warehouse developer and fund manager Global Logistic Properties (GLP) has begun the process of filing for an initial public offering of its US assets which could value the business at $20 billion, according to an account in the Wall Street Journal late on Wednesday.
The IPO on a US market could happen this year, according to sources familiar with the matter who were cited in the media report, with the company planning to raise up to $3 billion via the share sale.
The US offering, should it take place at the figures mentioned, would allow the private company’s owners to sell off less than a quarter of the company’s global warehouse footprint at a valuation more than 72 percent higher than what they paid to purchase all of GLP, which then held assets in North and South America, Europe, China and Japan, less than a year and a half ago.
A consortium led by GLP CEO Ming Z Mei and including China Vanke, Hopu Investment Management, Bank of China Group Investment and Hillhouse Capital Group, in addition to other GLP senior executives, bought out the then-Singapore-listed company, which makes money both from leasing space, and from fund management, in a deal agreed to at the end of November 2017 at an $11.6 billion valuation.
Filing Process Already Underway
Singapore-domiciled GLP, which manages nearly 200 million square feet (18.6 million square metres) of warehouses in the US, is said to have already filed confidentially with US regulators for its listing, which could potentially be the largest real estate IPO ever, according to the Journal report.
GLP originally came into being when former Prologis CEO Jeffrey Schwartz and his then-sidekick Mei, with the backing of Singapore sovereign wealth fund GIC, spun off the then-financially troubled warehouse developer’s mainland China and Japan assets into a separate entity in 2008. The company has since gone on to build warehouse portfolios in markets around the world, while profiting from serving as a general partner for its investment fund business.
GLP made its biggest investment in the US in 2014 when it agreed to pay $8.1 billion to Blackstone Group to acquire the IndCor warehouse portfolio. The company accelerated its North American expansion in December 2016 when it launched a $1.5 billion fund aimed at adding to its US portfolio.
The US IPO is being underwritten by Citigroup and Goldman Sachs, according to the Journal report, which cautioned that GLP’s owners are also entertaining offers from potential buyers of the US assets.
The company, which currently ranks as the second-largest owner of warehouse assets globally, with some 785 million square feet of sheds in its portfolio, would use proceeds from the listing to pay down existing debt.
Buyout Consortium Achieves Partial Exit
Should GLP achieve its reported $20 billion valuation target for the US properties, the IPO would mark a milestone of the increase in value of logistics assets in recent months.
When GLP’s current owners purchased the company at the end of 2017, it owned or managed some 636 million square feet of warehouses globally, an amount it has since expanded by just under 24 percent.
In terms of value, as of the end of January 2018, GLP had $46 billion in assets under management, or around 39 percent less than its current AUM, according to its website, of approximately $64 billion.
In selling off its US assets GLP could also point the way for its current owners to sell off portfolios of warehouses across Asia, the Americas and Europe as a way to maximise the return on the assets which it bought from its shareholders, including GIC, at a premium of 25 percent to its then-trading price less than 17 months ago.
The buyout was first agreed to at the end of November 2017, and approved by shareholders on 10 January 2018, before the company was de-listed on 22 January last year.
In addition to its China, Japan and US operations, GLP in October 2017 agreed to pay $2.8 billion to buy Gazeley’s European portfolio, which then covered 1.6 million square metres, from Canada’s Brookfield Asset Management.
Then in September of last year GLP unveiled an Indian joint venture with the Canada Pension Plan Investment Board (CPPIB) and IndoSpace, a logistics offshoot of local investment firm Everstone to invest there. In December, GLP and Indospace launched a $1.2 billion fund to invest in the expansion of that joint venture platform.
Prologis, which was formed from the merger of AMB and Prologis in 2011, is the largest logistics real estate company in the world, with some $97 billion in assets under management and a portfolio of 772 million square feet.