Global Logistic Properties, the largest industrial owner in Brazil, is poised to widen its lead in the country even further with the acquisition of the industrial real estate assets of its nearest rival, BR Properties. It has agreed to acquire 34 warehouse and logistics assets from the São Paulo-based commercial real estate firm for R$3.18 billion (€1 billion; $1.36 billion) in a transaction that is anticipated to close by the end of August.
The portfolio represents the bulk of BR Properties’ industrial real estate assets in Brazil, comprising 1.2 million square meters, or 13 million square feet, of completed logistics assets. More than 86 percent of the properties are located in São Paulo and Rio de Janeiro.
According to GLP’s website, BR Properties currently is the second-largest warehouse and logistics provider in the Latin American nation. GLP is the dominant player, with 1.4 million square meters of finished properties and a development pipeline of 800,000 square meters. However, its Brazilian holdings stand to grow to 2.6 million square meters, or 28 million square feet, upon the completion of the BR Properties deal.
GLP struck the deal after negotiations between BR Properties and WTGoodman IBP Participações, a joint venture between Australia’s Goodman Group and Brazilian developer WTorre, fell through. In November, BR Properties originally had announced an agreement to sell all of its industrial and logistics facilities to the joint venture for R$3.18 billion. WTorre, which owns 6.86 percent of BR Properties, is one of several shareholders in the company; the others include Brazilian investment bank Banco BTG Pactual, which holds 24.53 percent; local pension plan Petros, which owns 8.49 percent; and GIC Private Limited, with 6.48 percent.
Jeffrey Schwartz, GLP’s co-founder and chairman, said in a statement: “Our strong balance sheet and prudent financial discipline have allowed us to react quickly on this strategic opportunity, which will be immediately accretive to GLP. BR Properties’ portfolio of high-quality, strategically-located logistics assets complements our existing portfolio well and will further strengthen our market leadership position in Brazil, where we feel very good about the long-term prospects.” The firm said it did not have a specific plan for acquisition financing, but planned to pay for the portfolio without issuing additional equity.
The acquisition from BR Properties follows GLP’s announcement last month that it had raised $230 million in additional capital commitments from GIC and the Canada Pension Plan Investment Board (CPPIB) for its GLP Brazil Development Partners I. That fund was formed in November 2012 through the purchase of six industrial development projects from São Paulo-based real estate fund manager Prosperitas for $464 million.
At the same time, GLP also formed GLP Brazil Income Partners I with GIC, CPPIB and the China Investment Corporation for the acquisition of 34 stabilized assets and one development project from Prosperitas for nearly $1.1 billion. The close of the two portfolio deals immediately made GLP the largest logistics provider in Brazil.