GLP – Logistics As A Way of Life
With a successful Singapore listing underpinning further growth, Asia’s largest logistics facilities provider, Global Logistics Properties (“GLP”), is well positioned for the next phase of its development.
Global Logistic Properties is Asia’s largest provider of modern logistics facilities, with a peerless network of modern logistics facilities across 26 major cities in China and Japan. It has been a powerful player in this are for nine years, but is newly galvanized by its successful listing on the Singapore Exchange in October 2010 and is already looking to the next stage of its development. GLP already has a formidable portfolio: 308 completed properties, including 54 logistics parks in 19 major Chinese cities and a further 69 parks in Japan. Between them they make up a 9.7 million square metre portfolio.
On one level, the model is simple: China for growth, Japan for table yield. But in fact, both markets provide momentum. “People say Japan has been a slow growth market, but from the beginning we have experienced very strong demand for large, modern facilities as Japanese companies look to outsource logistics operations and reduce their operating costs,” says Ming Z. Mei, Chief Executive Officer of GLP. “As a company we would like to have more of our equity in China, but to balance that we are still looking at ways to grow our presence in Japan and meet customer demand.”Engine of growth
But China will clearly be the main engine of growth for the foreseeable future, where GLP has been combining very strong demand in its first-tier cities with a growing need for quality facilities in second tier cities too. Ming is linking his business to the trend of growing domestic consumption in China, for which infrastructure and logistics development will be vital. “We are seeing a significant push by the government to emphasize domestic consumption, and that will drive our business as well,” he says. “There is another emerging trend as well: with 470 million internet users, particularly the younger generation, people are increasingly buying everything online. This shift in buying habits, with e-commerce becoming mainstream, will yield substantial demand from customers to accommodate it.” Half of GLP’s China business in any given month comes from existing, expanding clients; the other half, from new customers
.One of the keys to GLP’s success is its mindset. “We view ourselves as a logistics infrastructure provider,” Ming says. “When we think about providing a facility to our customers, we are not solely focused on the cost per square metre for that one facility. We think about the overall supply chain and how to improve the client’s distribution network and reduce total costs by consolidating in one location.” A typical client has only 8-10% of its total logistic costs in warehouse rent: the bulk is transportation, to the optimal location can result in considerable savings. “We can create a network that optimizes transportation costs. Saving 20% on those costs can offset the rent. By providing an extensive network of solutions we are more than just a landlord, we are a provider of local solutions to clients that truly help their bottom line.”Securing growth
The October listing was one of Singapore’s largest ever, and was taken up enthusiastically. “The listing was a way for us to provide a sustainable capital source to secure our growth,” says Ming. “It repositioned us for our next phase.” It has also provided access to the sector for investors. This is a good time to be strongly capitalized, particularly when concerns about inflation are drying up liquidity in China, with bank lending becoming less easy to secure for competitors. “For a company like ours – well capitalized with very little leverage in China – that’s a good thing,” says Ming.
GLP started the year with an acquisition which illustrates its ambitions, when it entered a sales and purchase agreement for a 53% effective interest in Airport City Development, which is the sole developer of the airside cargo handling and bonded logistics facility as Beijing Capital International Airport. As well as adding 793,000 square metres of gross floor area to the China portfolio, and putting the group at the forefront of Chinese air cargo logistics, it put into partnership with Beijing Capital Airport – a fellow shareholder in Airport City Development – which has control of 1 other airport in China.
“You will see us continue to grow our business through various methods including joint ventures with local governments and other opportunistic acquisitions when we come across them,” says Ming. And, in future, this is likely to include a presence in other markets. “Over the next few years we plan to continue to be a leader in China and Japan by a wide margin, and hopefully have a meaningful presence in other countries in Asia as well,” Ming says.
