GLP in exclusive talks to buy $1.8bn LaSalle logistics portfolio

The Asia logistics giant led by ex-ProLogis chief Jeff Schwartz and backed by the Government of Singapore Investment Corporation has reportedly been granted exclusivity in its negotiations to buy the Chicago-based investment management firm’s 24-asset Japanese logistics portfolio.

LaSalle Investment Management, the Chicago-based real estate investment management arm of property services firm Jones Lang LaSalle (JLL), is poised to exit a $1.8 billion portfolio of logistics properties to Global Logistic Properties (GLP), the Singapore-listed real estate firm.

According to a report by Bloomberg, G
LP, which is led by the former chief executive officer and chairman of logistics giant ProLogis Jeff Schwartz and is backed by the Government of Singapore Investment Corporation (GIC), has been picked from a list of bidders that included The Blackstone Group, Mitsubishi Estate and Kenedix as preferred bidder for the portfolio, which comprises 24 warehouses across Japan.

The portfolio’s sale price is expected to be approximately ¥140 billion (€1.25 billion; $1.8 billion), higher than the gross asset value of $1.6 billion reported on LaSalle’s website as at August 31, 2010.

PERE understands that the properties, which includes assets in Tokyo and Osaka, are being sold from LaSalle’s first Japanese logistics investment vehicle, the LaSalle Japan Logistics Fund, which closed in 2004 on just shy of $400 million of equity and commitments from 14 investors.

According to one source familiar with the transaction, it is understood that LaSalle began marketing the portfolio through JLL and Sumitomo Mitsui Trust prior to March’s tragic earthquake. However, bidders were made aware of pricing afterwards, so it is unclear whether there was any reduction following the event.

Another source familiar said LaSalle is expected to make a profit from the sale and, following its completion, should begin work on forming a third Japanese logistics fund to follow 2007’s LaSalle Japan Logistics Fund II, which closed on $1.15 billion of equity from 27 investors. “I think their motivation is to crystalise a return so they can go out and raise more capital,” the source said. “They have their profits, interest rates [in Japan] are low right now and this is a big deal to do.”

The investment would represent GLP’s largest single investment since its formation at the end of 2008 when GIC Real Estate, the real estate arm of GIC, created the company via the acquisition of Denver-based ProLogis’ China operations and Japanese fund interests in a deal valued at $1.35 billion. In October 2010, GLP listed on the Singapore stock exchange.