GLP breaks out of Asia with R$2.9bn Brazil entry

CPPIB, CIC and GIC back Global Logistic Properties in the purchase of a huge Brazilian portfolio, making the firm the largest logistics real estate investment manager in the country.

Global Logistics Properties (GLP) has expanded its empire beyond Asia for the first time with the R$2.9 billion (€1.14 billion; $1.45 billion) acquisition of a pair of large portfolios in Brazil – becoming the largest logistics real estate investment manager in the country in the process.

With substantial backing from the Canada Pension Investment Board (CPPIB), China Investment Corporation (CIC) and the Government of Singapore Investment Corporation (GIC), GLP has formed two joint venture partnerships to buy the portfolios from funds managed by São Paulo-based developer and fund manager, Prosperitas.

In total, GLP and its partners have purchased a 40-strong portfolio, based primarily in São Paulo and Rio de Janeiro and comprising 34 stabilised assets, one development and five assets under development, valued independently at R$2.5 billion as of May this year. They were bought from funds: Prosperitas Real Estate Partners III Industrial Co-Investments, Prosperitas II Fundo de Investimento em Participações and Prosperitas III Fundo de Investimento em Participações. The deal is expected to crystalise next month, at which point GLP will assume asset management responsibilities.

The first of the two joint ventures is for the 34 stabilised assets. GLP and CIC will each own 34.2 percent of the venture, while GIC will own 20 percent and CPPIC 11.6 percent. The second of the joint ventures is for the five developments. For this, GLP will own 41.3 percent, CPPIB 39.6 percent and GIC 19.1 percent. CIC is not taking part in that venture

As part of the transaction, GLP will inherit a 40-strong team in Brazil, which will be in charge of day-to-day operations and for growing its presence in the country.

Jeff Schwartz, deputy chairman of GLP said: “This transaction represents a unique opportunity for GLP, giving us a market-leading position in Brazil, as well as a strong platform for future growth in the country. It is consistent with both our strategy to focus on only the best markets globally and in growing our fund management platform. This exciting transaction builds on our successful and market-leading businesses in China and Japan and we are confident that it will create long-term value for our shareholders.”

The expansion from Asia sees Schwartz spearhead again the growth of another logistics real estate global superpower. He previously led the expansion of ProLogis over 14 years but quit in November 2008 amid the start of the global financial crisis when conditions required the business to meaningfully deleverage and cut costs. He formed GLP the following year with backing from GIC and subsequently purchased ProLogis’ China operation and fund interests in Japan in a deal valued at $1.3 billion.

The news of GLP’s expansion into Brazil comes as the firm puts the finishing touches on its plans to publically list ¥209 billion (€2 billion; $2.6 billion) of its Japanese properties – almost half of its entire wholly owned Japanese portfolio – in a J-REIT.  GLP obtained listing approval from the Tokyo Stock Exchange today. The firm is expected to retain an approximately 15 percent share in the newly formed business.

Between that transaction and the Brazilian venture, GLP expects to triple its assets under management held on behalf of funds and ventures to $7.2 billion.

Find out  more about GLP's plans for Asia in 2013 at the PERE Summit: Asia where Jeffrey Schwartz will be interviewed live onstage.