GLP Reports Continued Growth; Launches US$3 Billion China Logistics Fund

GLP Reports Continued Growth; Launches US$3 Billion China Logistics Fund

  • 1HFY2014 China revenue up 39%, driven by strong leasing momentum and continued rent growth
  • Commenced 1.1 million sqm of developments in China in 1HFY14, up 39%
  • Six leading global institutions investing alongside GLP to form world’s largest China-focused logistics infrastructure fund
  • Fund management platform grows to US$11.4 billion, enhancing GLP’s returns

 

US$ million

1H FY14

1H FY13

Change

Change (J-REIT and FX adjusted[1])

2QFY14

2QFY13

Change

Change (J-REIT  and FX adjusted1)

Revenue

277

343

(19%)

15%

140

173

(19%)

16%

EBIT

472

438

8%

44%

219

250

(13%)

11%

Earnings (PATMI)

349

347

0%

56%

145

195

(26%)

17%

 

 

Singapore, 14 November 2013 – Global Logistic Properties Limited (“GLP”), the leading provider of modern logistics facilities in China, Japan and Brazil, today reported continued growth in the six months ended 30 September 2013 (“1HFY14”), driven by a 39% increase in China revenue. The Company also significantly expanded its fund management platform to US$11.4 billion, with the launch of the world’s largest China-focused logistics infrastructure fund and recent asset sales to GLP J-REIT.

 

1HFY14 Group revenue was US$277 million. This was 19% lower than the same period last year (“1HFY13”), mainly due to the sale of properties to GLP J-REIT and foreign exchange movements1. Adjusting for these items, Group revenue increased 15%. Revenue in China was US$161 million, up 39% year-on-year, driven by strong leasing momentum and continued rent growth.

 

1HFY14 Group EBIT was up 8%, with earnings (PATMI) stable. Adjusting for the contribution of properties to GLP J-REIT and foreign exchange movements, EBIT and earnings were up 44% and 56% respectively, driven by revaluation gains of US$242 million.

 

Jeffrey H. Schwartz, Co-Founder of GLP and Chairman of the Executive Committee, said: “We continue to make substantial operational progress across the company, thanks to strong demand in all our markets. The launch of our new China fund, the largest of its type in the world, is transformational for GLP. It will provide significant capital to support our sustainable long-term growth in this exciting market, while enhancing returns on our invested capital. Our strong development pipeline and best-in-class fund management platform will enable us to strategically scale our business while delivering superior risk-adjusted returns for our stakeholders.”

 

Launches US$3 Billion China Logistics Fund

In line with its stated strategy of growing its fund management business, GLP today announced the launch of CLF Fund I, a platform focused on the development of logistics infrastructure in China. Six leading global institutions are investing alongside GLP to capture the significant opportunities arising from growth in domestic consumption and the shortage of modern logistics facilities in China. Four of these investors are new to GLP’s fund management platform, of which three are national pension and sovereign wealth funds. The Fund attracted strong interest from institutional investors, with the offering significantly oversubscribed.

 

The Fund will be GLP’s exclusive vehicle to develop new, wholly-owned logistics development projectsin China[2] during the three year investment period. The Fund provides additional capital to support sustainable long-term growth while enhancing returns on GLP’s invested capital. GLP will seed the Fund with land to support 1.8 million square meters (“sqm”) (19 million square feet (“sq ft”)) of leasable area. Future developments will benefit from GLP’s strong land reserve. GLP is the asset manager and will retain a 56% stake in the Fund. GLP has secured, on behalf of the Fund, a US$1 billion credit facility from China Merchants Bank to fund development activity in China.

 

Significant Leasing Momentum

China registered a strong quarter of leasing in 2QFY14, with 575,000 sqm (6.2 million sq ft) of new and expansion leases, up 60% year-on-year. Rent growth within the portfolio was robust, underpinned by strong customer demand and a limited supply of modern logistics facilities. During the quarter, rents increased 6.9% on renewals in China. Average rental rates increased 5.0% year-on-year while same-store net operating income was up 7.8% in 1HFY14.

 

Domestic consumption remains a key driver of demand, as evidenced by recent major leases with e-commerce and consumer goods companies such as Vipshop, Tencent’s Yixun.com, Watsons and Haier, as well as third party logistics providers such as Deppon, DHL and Sankyu. E-commerce customers now represent 22% of leased area in China. The lease ratio was 90%, remaining stable, with the domestic consumption-focused portfolio 95% leased. Continued growth in developments led to a 36% year-on-year growth in NAV to US$5.1 billion. China now comprises 59% of the company’s NAV.

 

GLP commenced 1.1 million sqm (11.8 million sq ft) of new developments in China in 1HFY14, 39% higher than a year earlier, and remains confident in meeting its target of 2.5 million sqm (26.9 million sq ft) of new developments for FY2014. GLP continues to focus on growing its land bank in China, with 788,000 sqm (8.5 million sq ft) acquired in 2QFY14, which was all converted from GLP’s land reserves. Land reserves grew 24% year-on-year to 11.8 million sqm (127 million sq ft), providing a significant pipeline for future growth.

 

In Japan, the lease ratio remains high at 99%, with a strong customer retention rate of 81%. During the quarter, rents increased 3.0% on renewals in Japan, while average rents remained stable at JPY1,081/sqm/month. Subsequent to quarter-end, GLP commenced development of GLP Zama, a new 132,000 sqm (1.4 million sq ft) multi-tenant logistics facility in Greater Tokyo. Demand from customers in Japan continues to be strong, with leasing negotiations at developments progressing well.

 

The lease ratio in Brazil stands at 95%. The portfolio has a long weighted average lease expiry period of eight years and the development pipeline remains healthy at 800,000 sqm (8.6 million sq ft).

 

Ming Z. Mei, Co-Founder and Chief Executive Officer of GLP, said: “The past six months have seen a significant pick-up in demand for our facilities, particularly in China. The opportunities remain compelling in all of our markets, thanks to robust domestic consumption, the growth of e-commerce and undersupply of modern logistics facilities. Looking forward, our strong balance sheet and focus on the world’s best markets will ensure that GLP is well-positioned for further growth.”

 

Growing Fund Management Platform

Fund management revenue in 1HFY14 was US$24 million, up 71% from a year earlier. This comprised asset and property management fees of US$17 million and property development fees of US$7 million. GLP expects fund fees to continue increasing in tandem with the strategic growth of the fund management platform.

 

GLP’s strong fund management platform, which now covers China, Japan and Brazil, leverages GLP’s asset management expertise and strong relationships with leading global institutions. With the addition of CLF Fund I, GLP’s fund management platform increases to US$11.4 billion of assets under management. Of this, US$5.8 billion has been invested, with a further US$5.6 billion of committed capital.

 

In 2QFY14, GLP announced the sale of nine properties to GLP J-REIT for US$564 million. The first tranche, comprising seven properties from GLP Japan Income Partners I, was completed in October 2013. The sale of the remaining two properties, wholly owned by GLP, is expected to complete in March 2014. GLP is expected to receive net cash proceeds of approximately US$132 million after maintaining its 15% interest in the J-REIT.

 

Healthy Capital Base

GLP’s balance sheet remains strong, with net debt of US$1.5 billion, net debt to assets of 12% and look through leverage of 15%. As of 30 September 2013, GLP’s weighted average debt maturity was 4.7 years, up from 3.2 a year ago. 70% of GLP’s debt matures in FY2017 and beyond and fixed rate borrowings constituted 73% of GLP’s total borrowings.

 

Earnings Call/Webcast Information

A briefing for investors and analysts is scheduled on Thursday 14th November 2013 at 6pm Singapore time. Please dial +65 6723 9381 to join the briefing (passcode: 76076027) or visit our website (ir.glprop.com) to access our webcast for the event. A replay of the briefing will also be available on our website.

[1] FX adjustments include FX translation effects, FX gains/losses and fair value changes in financial derivatives


About Global Logistic Properties (www.glprop.com)

Global Logistic Properties Limited (“GLP”) is the leading provider of modern logistics facilities in China, Japan and Brazil. Our property portfolio of 22.4 million square meters (241 million square feet) is strategically located across 62 cities, forming an efficient logistics network serving more than 700 customers. We are dedicated to improving supply chain infrastructure for the world’s most dynamic manufacturers, retailers and third party logistics companies. Domestic consumption is a key driver of demand for GLP.

 

The Group 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

 

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[1] FX adjustments include FX translation effects, FX gains/losses and fair value changes in financial derivatives

[2] Subject to satisfaction of the Fund’s investment and diversification criteria