TEXT-Fitch: No impact on GLP's ratings from JV for Brazilian properties

Thu Nov 15, 2012 2:21am EST

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(The following statement was released by the rating agency)

Nov 15 - Fitch Ratings says it does not expect Singapore-listed Global Logistic Properties Limited's (GLP; 'BBB+'/Stable) ratings to be affected by the announcement that it will form joint ventures (JV) with Canada Pension Plan Investment Board, China Investment Corporation and Government of Singapore Investment Corporation to acquire properties in Brazil.

As GLP intends to fully fund its initial equity contribution of USD334m through an equity placement, Fitch believes the impact on GLP's financial profile and ratings will be limited. GLP will take a 34% stake in a JV for a stabilised portfolio and 41% in another JV for a development portfolio. Stabilised properties are properties that have been completed or acquired for a year or with a lease ratio that is more than 93%.

Fitch believes the JVs will provide the company with exposure to a high-growth market with experienced co-investors. With the acquisition, GLP will become the largest in the Brazilian logistics real estate market.

Separately, GLP has also announced that the new J-REIT, announced on 1 November, had obtained listing approval from the Tokyo Stock Exchange. GLP expects to retain a stake of approximately 15% in the J-REIT upon the completion of the IPO. Fitch reiterates that it expects GLP's credit profile will be strengthened through the establishment of the J-REIT as around half of the expected proceeds of USD2.6bn will be used to repay existing debt and the remaining half primarily for investment in China and Japan.

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