GLP Reports 1QFY18 Earnings; Continued Fund Management Growth

GLP Reports 1QFY18 Earnings; Continued Fund Management Growth

GLP reported a 27% increase in revenue for the three months ended 30 June 2017. Core earnings excluding revaluations were stable year-on-year, underpinned by recurring income from operations and the continued expansion of GLP's fund management platform.

  • 1Q FY18 revenue up 27%, with stable core earnings excluding revaluations
  • Continued expansion of fund management platform with fund fees up 15%
  • GLP continues to execute its strategy and remains focused on growing its logistics ecosystem
  • Proposed privatization: Offer of S$3.38 in cash per share represents 81% premium over 12-month VWAP1 and exceeds highest ever closing price since listing

US$ million

1Q FY18

1Q FY17

YoY

Change

Revenue

262

207

27%

Earnings

144

203

(29%)

Earnings (ex reval)

89

39

131%

Core Earnings2

124

146

(15%)

Core Earnings (ex reval) 2

71

69

3%

Singapore, 8 August 2017 – GLP, the leading global provider of modern logistics facilities, reported a 27% increase in revenue for the three months ended 30 June 2017 (“1Q FY18”). Core earnings excluding revaluations were stable year-on-year, underpinned by recurring income from operations and the continued expansion of GLP’s fund management platform.

Mr. Ming Z. Mei, Chief Executive Officer of GLP, said: “With retail and consumption patterns changing, both opportunities and challenges are ahead for the modern logistics business. We continue to position our business for long-term growth by creating a logistics ecosystem that can better serve our customers. It is business as usual for GLP. I continue to serve as CEO and our strong local teams remain focused on executing our strategy and further developing our global platform.”

Financial Highlights

1Q FY18 earnings (PATMI) were US$144 million, 29% lower year-on-year, due to lower revaluations this quarter. Earnings excluding revaluations were up 131%, due to foreign exchange movements.

Operational Highlights

Group new and renewal leases increased 35% year-on-year to 3.3 million square meters (“sqm”) (36 million square feet), with approximately 72% of customers renewing their leases with GLP. Rent growth remained healthy, with the Group recording 5.2% growth in same-property net operating income (“NOI”) and 7.7% rent growth on renewal leases.

GLP’s stabilized logistics portfolio lease ratio in China was 84%, down from 85% last quarter, driven by a lower lease ratio of development properties that stabilized in 1Q FY18. As a result, the Group’s average lease ratio stood at 90% as of 30 June 2017, 1% lower quarter-on-quarter.

Development Highlights

GLP’s development program is driven by customer demand. In 1Q FY18, the Group started US$226 million and completed US$252 million of development projects. This represents 11% and 15% of Group development starts and completions targets respectively.

Development is historically lower in the first quarter due to seasonality but generally picks up in the second half of the financial year. The Company continues to exercise strong capital discipline and expects to meet its FY18 global development targets of US$2.2 billion of development starts and US$1.7 billion of development completions.

Fund Management Highlights

GLP has completed the syndication of its third US portfolio. GLP is the asset manager and retains an 8% stake in the portfolio.

GLP’s US$39 billion fund management business represents a recurring source of income. 1Q FY18 fund management fees were US$48 million, up 15% year-on-year. GLP’s fund management platform has US$11 billion of uncalled capital, which will generate additional fund management fees as it is invested.

GLP continues to look for opportunities to grow the platform in new and existing markets, including a potential new China income fund, continuing to sell assets to the J-REIT and potentially expanding into Europe.

Capital Management Highlights

The Company’s financial position remains strong, with pro-forma3 cash of US$1.2 billion and net debt to assets of 36% on a look through basis.

Proposed Privatization

On 14 July 2017, GLP and Nesta Investment Holdings Limited (the “Offeror”) jointly announced a proposed privatization of GLP by way of a scheme of arrangement (the “Scheme”). The Offeror comprises SMG, owned by GLP’s Chief Executive Officer Ming Z. Mei, HOPU, Hillhouse Capital, Bank of China Group Investment and Vanke.

The proposed Scheme consideration of S$3.38 per share will not be reduced by the FY17 dividend of S$0.06 per share, which will be paid on 22 August 2017.

After an extensive evaluation of all firm proposals received on 30 June 2017, the Special Committee, with guidance from its external financial and legal advisers, is of the view that the proposed Scheme is superior and value-enhancing for all shareholders.

The proposed Scheme is considered superior due to its price certainty at significant premiums to historical prices, greater degree of deal certainty due to the limited conditionality of the bid and likelihood that it will be completed within a defined timeframe, reducing execution risk. As such, the preliminary recommendation of the Independent Directors is that shareholders vote in favor of the Scheme, following an opinion of the financial adviser that the Scheme Consideration is fair, from a financial point of view, to the shareholders.

Evercore Asia (Singapore) Pte. Ltd. has been appointed as the independent financial adviser (the “IFA”) to advise the Independent Directors of the Company in making a final recommendation to the shareholders in connection with the Scheme. Details of the Scheme, including the Independent Directors’ final recommendation on the Scheme and the IFA’s advice, will be included in the Scheme Document, which will be dispatched to shareholders in due course. If shareholders approve the Scheme at the Scheme Meeting, and subject to the satisfaction of the other Scheme conditions, the transaction is expected to be completed on or before 14 April 20184.

GIC, as the single largest shareholder of the Company with a 36.84% stake, has provided an irrevocable undertaking to the Offeror to vote in favor of the Scheme, on and subject to the terms set out in the Joint Announcement.

Shareholders are advised to refrain from taking any action in relation to their shares which may be prejudicial to their interests until they or their advisers have considered the information set out in the Scheme Document.

Earnings Call/Webcast Information

A briefing for investors and analysts is scheduled for Tuesday, 8 August 2017 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.

About GLP (www.glprop.com)

GLP owns and manages a global portfolio of 56 million square meters, with dominant market positions in China, Japan, US and Brazil. Domestic consumption is a key driver of demand for GLP. The Company is also one of the world’s largest real estate fund managers, with assets under management of US$39 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

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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. The directors of the Company (including any who may have delegated detailed supervision of the preparation of this press release) have taken all reasonable care to ensure that the facts stated and all opinions expressed in this press release in each case which relate to the Company (excluding information relating to the Offeror or any opinion expressed by the Offeror) are fair and accurate and that, where appropriate, no material facts which relate to the Company have been omitted from this press release, and the directors of the Company jointly and severally accept responsibility accordingly. For the avoidance of doubt, Mr. Ming Z. Mei and Mr. Fang Fenglei take no responsibility for the preliminary recommendation set out in paragraph 14.2 of the joint announcement issued by the Company and the Offeror dated 14 July 2017. Where any information which relates to the Company has been extracted or reproduced from published or otherwise publicly available sources or obtained from the Offeror, the sole responsibility of the directors of the Company has been to ensure that, through reasonable enquiries, such information is accurately extracted from such sources or, as the case may be, reflected or reproduced in this press release. The directors of the Company do not accept any responsibility for any information relating to the Offeror or any opinion expressed by the Offeror.

1 For the period up to and including 30 November 2016

2 Core earnings includes revaluation changes related to development profit (recurring part of GLP's earnings stream) and NOI growth. To enable comparability, core earnings adjusts for non-recurring items such as revaluation changes related to cap rate and discount rate adjustments, foreign exchange gains/losses and gains/losses from dispositions. Please refer to page 11 of the 1Q FY18 supplemental for further information

3 Assumes GLP’s equity stake in GLP US Income Partners III syndicated to 8%

4 No later than nine months from the date of the Implementation Agreement or such other date as may be agreed in writing between the Offeror and the Company