GLP 3Q FY18 Earnings Up 64%; Continued Growth in Fund Mgt Platform
GLP reported a 64% increase in earnings (PATMI) for the three months ended 31 December 2015. Results were underpinned by higher earnings in China, development gains in Japan and GLP’s entry into the US market.
- 3Q FY16 Earnings up 64%, driven by higher earnings in China, development gains in Japan and GLP’s entry into the US market
- New and renewal leases up 22%1to 2.4 million sqm in 3Q FY16
- US$67 million of value creation (GLP share) from 3Q FY16 development completions; 27% value creation margin
- 3Q FY16 Fund fees up 19% to US$37 million, driven by continued growth of fund management platform
Singapore, 4 February 2016– GLP, the leading global provider of modern logistics facilities, reported a 64% increase in earnings (PATMI) for the three months ended 31 December 2015 (“3Q FY16”). Results were underpinned by higher earnings in China, development gains in Japan and GLP’s entry into the US market.
Mr. Ming Z. Mei, Chief Executive Officer of GLP, said: “Despite the uncertain economic environment, demand for modern logistics facilities continues to be driven by long-term, structural trends in domestic consumption. We signed 2.4 million sqm (26 million sq ft) of new and renewal leases in 3Q FY16, up 22%1 year-on-year. Our fund management platform continues to deliver solid results, increasing our return-on-equity. We remain focused on executing our strategy of being the best operator, creating value through developments and expanding our fund management platform.”
China earnings were up 50% driven by higher asset values, rent growth and continued lease up of developments, while Japan was up 34% on the back of higher development completions.
GLP has outlined one-time events on page 11 of its 3Q FY16 supplemental to enable better earnings comparability across periods. These adjustments include cap rate changes, foreign exchange gains/losses and gains/losses from dispositions.
Stable Leasing Performance with Solid Customer Demand
GLP’s average lease ratio remained unchanged quarter-on-quarter at 93%, with customer retention ratio at 69%, up from 63% last quarter. 90% of GLP’s portfolio is occupied by businesses geared towards domestic consumption, which remains relatively stable even in times of slower economic growth.
Leasing in China continues to reflect healthy customer demand, with 1.4 million sqm (15 million sq ft) of new and renewal leases signed in 3Q FY16, up 27% year-on-year. The stabilized lease ratio in China stood at 88% as of 31 December 2015. Same-property portfolio rents in China increased 4.6% year-on-year in 3Q FY16. GLP continues to see strong leasing demand from the retail, e-commerce, auto parts, pharmaceutical and healthcare industries.
Same-property net operating income was strong across all of GLP’s markets, with China up 7.1%, Japan up 2.2%, Brazil up 7.2% and US up 8.1% in 3Q FY16.
Development Pipeline Generating Strong Value Creation
Development of modern logistics facilities is one of GLP’s key engines of growth. GLP started US$826 million of new developments in 3Q FY16, meeting 55% of its FY16 Group development starts target (US$2.9 billion). During the same period, GLP completed US$516 million of developments with an approximate value creation margin of 27%. This translated to US$67 million of development gains (GLP share, pre-tax). GLP has met 66% of its FY16 Group development completions target (US$2.0 billion) and remains confident of meeting its FY16 guidance as it continues to capture customer-driven demand.
GLP has acquired a 15.5% stake in China Materials Storage and Transportation Development Company (“CMSTD”) and will also establish a development joint venture, giving GLP access to CMSTD’s land resources of more than 9 million sqm (100 million sq ft).
Further Growth in Fund Management Platform
On 4 November 2015, GLP completed its acquisition of a US$4.7 billion portfolio (“GLP US Income Partners II”). At the time of the acquisition, 66% was contracted to be syndicated to China Life and two leading global institutional investors. This is expected to close in April 2016 upon the receipt of US regulatory approvals. Additional investors are expected to join in 2016, with GLP retaining a stake of less than 10%.
Fund management revenue in 3Q FY16 increased 19% year-on-year to US$37 million. This comprised asset and property management fees of US$26 million and development fees of US$11 million from approximately US$22 billion of invested capital. GLP has US$10 billion of uncalled capital to be invested over the next three to four years, which will further increase the fees earned through its fund management platform.
Healthy Capital Base to Capitalize on Growth Opportunities
GLP’s financial position remains strong, with cash of US$2.2 billion and net debt to assets of 23% on a look through basis following the syndication of GLP US Income Partners II.
Earnings Call/Webcast Information
A briefing for investors and analysts is scheduled for Thursday, 4 February 2016 at 9.00 am Singapore time. Please visit our website (ir.glprop.com) to access our webcast for the event. Questions may be submitted during the live webcast and a replay of the briefing will also be available on our website.
1Excludes impact of new US segment for comparability purposes
About GLP (www.glprop.com)
GLP is the leading global provider of modern logistics facilities. The Company develops, owns and manages a 50 million square meters (538 million square feet) portfolio of logistics facilities across China, Japan, Brazil and USA that cater to domestic consumption. GLP’s 4,000 customers include some of the world’s most dynamic manufacturers, retailers and third party logistics companies. Fund management is an important and growing part of GLP’s business, providing significant capital to support sustainable long-term growth, while enhancing returns on GLP’s invested capital. As of December 31, 2015, GLP’s total portfolio assets amounted to US$34 billion.
GLP is listed on the Mainboard of Singapore Exchange Securities Trading Limited (SGX stock code: MC0.SI; Reuters ticker: GLPL.SI; Bloomberg ticker: GLP SP).
GLP Investor Relations & Media Contact:
Ambika Goel, CFA
SVP- Capital Markets and Investor Relations
Tel: +65 6643 6372
Email:agoel@glprop.com
## END ##
This press release is not an offer of securities for sale or a solicitation of an offer to purchase securities. The information in this press release may not contain, and you may not rely on this press release as providing, all material information concerning the condition (financial or other), earnings, business affairs, business prospects, properties or results of operations of GLP or its subsidiaries. Please refer to our unaudited financial statements for a complete report of our financial performance and position. This release may contain forward-looking statements that involve risks and uncertainties. Forward-looking statements include statements regarding the intent, belief and current expectations of GLP or its officers with respect to various matters. When used in this press release, the words "expects," "believes," "anticipates," "plans," "may," "will," "should," “intends,” “foresees,” “estimates,” “projects,” and similar expressions, and the negatives thereof, are intended to identify forward-looking statements. Similarly, statements that describe objectives, plans or goals also are forward-looking statements. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, availability of real estate properties, competition from other companies and venues for the sale/distribution of goods and services, shifts in customer demands, customers and partners, changes in operating expenses, including employee wages, benefits and training, governmental and public policy changes, and the continued availability of financing in the amounts and the terms necessary to support future business. You are cautioned not to place undue reliance on these forward-looking statements, which are based on the current view of management on future events and speak only as of the date of this press release. GLP does not undertake to revise forward-looking statements to reflect future events or circumstances. No assurance can be given that future events will occur, that projections will be achieved, or that GLP’s assumptions are correct.
