UPDATE 2-Singapore's Global Logistic Properties bets $1.4 billion on Brazil

Wed Nov 14, 2012 7:51am EST

* Teams up with CIC, GIC, Canada fund

* Set to buy $1.4 bln Brazil assets

* Follows Australian rival Goodman in entering Brazil

* Shares up 55 pct this year, second best index performer

By Charmian Kok and Anshuman Daga

SINGAPORE, Nov 14 (Reuters) - Singapore warehouse operator Global Logistic Properties Ltd is teaming up with large institutional investors to buy $1.4 billion of assets in Brazil as it looks to sustain its strong pace of growth.

Developers such as GLP, one of the world's largest warehouse operators, are looking to tap robust demand for high-quality warehouses in Brazil. Last week, Australian competitor Goodman Group also announced plans to develop logistic assets in Brazil through a joint venture.

GLP, which owns warehouses in Japan and China, will form joint ventures with the Canada Pension Plan Investment Board (CPPIB), China Investment Corp and Government of Singapore Investment Corp to buy 40 properties worth around $1.4 billion in the Latin American country.

"Brazil is the next hot spot," said Kian Lin Ong, an analyst at Maybank Kim Eng. "Investors are always looking for growth. Japan is more or less stable and in China I guess the growth is moderating. So, Brazil is a logical choice."

GLP, 50.6 percent-owned by sovereign wealth fund GIC, is the second-best performing stock in Singapore with a 55 percent surge this year in a broader market up 14 percent.

Taking advantage of the strong share price performance, GLP said it would largely fund its initial equity commitment of $334 million through a share placement.

CPPIB, one of the world's top pension funds and dealmakers, said its total commitment will be $343 million, of which $200 million will be funded at closing.

"This investment will significantly expand our logistics portfolio in Brazil and represents a rare opportunity to invest in a sizeable portfolio of high quality development and stabilized logistics assets," Peter Ballon, CPPIB's head of real estate investments in the Americas, said in a statement.

The Canadian pension fund manager has been actively scouting deals in this sector. In August, CPPIB and Australia's Goodman Group formed a new joint venture to target investments in U.S. logistics hubs.

STRONG TRACK RECORD

Analysts said GLP's strong track record of project implementation meant the company was in a favourable position to exploit Brazil's rising infrastructure spending and logistics facilities that are far from modern.

Around 88 percent of the Brazil portfolio will be located in Rio De Janeiro and Sao Paolo, GLP's chief executive officer Ming Z. Mei said on a conference call, adding the portfolio was expected to generate 18-19 percent returns before fees and other costs.

GLP said its $2.6 billion Japan real estate investment trust received approval from Tokyo Stock Exchange to list Dec. 21. The Singapore firm expects to raise net cash proceeds of $1.3 billion that it will use mainly for projects in China and Japan.

GLP told Reuters in an interview last month the firm was keen to grow at a rapid pace in China to support a boom in online commerce. (Additional reporting by Euan Rocha in Toronto

Editing by Muralikumar Anantharaman and Bernadette Baum)