Global Logistic Properties’ plan to set up a J-REIT offers some value propositions, CIMB says. Enhanced asset management could immediately add US$0.12/share to RNAV and the move offers a platform to realise mid-term asset-management value, estimated at around US$0.30/share, it says.
CIMB estimates the capital-recycling upside from deploying proceeds to China and Japan at US$0.05/share. The initial portfolio for injection generates US$102 million ($124 million) core pretax income, it notes, adding its initial assessment estimates the J-REIT’s yield at around 7.5%, assuming a spin-off at 1x P/BV, excluding asset-management fees paid back to GLP, which would compress yields.
It expects investors to use Japan Logistics Fund as an initial benchmark to evaluate the transaction; CIMB estimates JLF’s yield at around 6.7% at 1.1x P/BV. The house raises its target to $2.55 from $2.48, but keeps a Neutral call. “While still early, its stellar rally year-to-date (to 1.2x P/BV) suggests that the positives may have been priced in.” The stock is up 2.6% at $2.73, for a nearly 54% year-to-date rise.
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