The other new investment of size during the year was the common stock of Global Logistic Properties (SGX:MC0, Financial), a real estate operating company based in Singapore that owns leading industrial real estate platforms in Japan, China, and North America. The company also has a sizable development pipeline, primarily in Japan and China, as well as a leading asset management platform with more than $25 billion of assets under management. GLP had long been on Fund Management’s radar as it formerly represented the Asian business of ProLogis, one of the largest industrial real estate owners and a former holding in the Fund. During the financial crisis, ProLogis sold this platform to the Government of Singapore Investment Corporation (GIC) who subsequently relisted it as GLP in 2010. The Fund’s initial investment in GLP Common earlier this year coincided with a significant drop in the share price (to levels well below any reasonable estimate of Net Asset Value or NAV) in response to a couple of unexpected events—primarily the passing of its Executive Chairman and a large scale acquisition in the United States—as well as a more cautious tone towards development in China.
In the most recent quarter, the Fund continued to add to its position in GLP, making it a top 15 position in the Fund. At the same time the Fund was adding to its stake, GLP utilized its strong balance sheet to opportunistically buyback stock at discounted prices, a move that Fund Management supports. With value enhancing share repurchases, strong fundamentals in its core industrial real estate markets, and continued growth in assets under management and fee income, Global Logistics seems poised to generate NAV growth in excess of 10% per year over the next three to five years.
From Third Avenue Management (Trades, Portfolio)'s fourth quarter 2015 Real Estate Value Fund commentary.
