GLP Reports Continued Growth; Establishes Market-Leading Position in Brazil and Plans J-REIT IPO
- Solid 1H13 results: Revenue up 28% driven by strong operational performance in China, where revenues increased 72%
- Strategic entry into Brazil: US$1.45bn[1] transaction establishes market-leading position with large development pipeline, in partnership with CPPIB, CIC and GIC
- Plans US$2.6bn J-REIT IPO: Enhancing shareholder value by monetizing assets and recycling capital to fund future growth initiatives
|
US$ million |
3-month ended 30 Sep 2012 (2Q13) |
3-month ended 30 Sep 2011 (2Q12) |
Change |
6-month ended 30 Sep 2012 (1H13) |
6-month ended 30 Sep 2011 (1H12) |
Change |
|
Revenue |
173 |
139 |
25% |
343 |
268 |
28% |
|
EBIT excluding revaluation[2] |
129 |
102 |
26% |
260 |
198 |
32% |
|
EBIT |
250 |
222 |
13% |
438 |
345 |
27% |
|
PATMI excluding revaluation2 |
104 |
103 |
-- |
211 |
177 |
19% |
|
PATMI |
195 |
201 |
(3%) |
347 |
298 |
17% |
|
Net Operating Cashflow |
111 |
72 |
54% |
251 |
133 |
89% |
Singapore, 14 November 2012 - Global Logistic Properties Limited (“GLP” or “the Company”), one of the world’s leading providers of modern logistics facilities, today reported continued growth for the six months ended 30 September 2012 (“1H13”), with Group revenue up 28% and Group EBIT up 27%. The Company also announced that it will expand its global platform with a strategic entry into Brazil, in two joint ventures with Canada Pension Plan Investment Board (“CPPIB”), China Investment Corporation (“CIC”) and Government of Singapore Investment Corporation (“GIC”). In addition, GLP has received approval to list the real estate investment corporation (“J-REIT”) it has established on the Tokyo Stock Exchange through an initial public offering (“IPO”).
Mr. Jeffrey H. Schwartz, Deputy Chairman and Co-Founder of GLP said: “This is a strong set of results, with our market-leading businesses in China and Japan both continuing to perform strongly in the first half of the year. Our entry into Brazil, one of the world’s most attractive markets, will provide further opportunities for value creation. The launch of the J-REIT also represents a significant milestone for the company and will generate a recurring fee revenue stream as well as provide liquidity to further grow our business in China, Japan and other countries.”
“The global macroeconomic environment remains uncertain, but we believe that our strong balance sheet and focus on the world’s best markets will ensure that GLP is well-positioned for further growth.”
Continued Growth in 1H13
1H13 Group revenue rose 28% year-on-year to US$343 million, driven primarily by higher rents and the completion of development projects in China where revenue rose 72% in 1H13.
1H13 Group EBIT increased by 27%, driven by strong operational performance in China. 1H13 Group PATMI increased 17% while PATMI excluding revaluation2 increased 19%. Results were impacted by non-cash unrealized foreign exchange losses (“FX”) on the Group’s JPY assets. 1H13 Group PATMI excluding revaluation2 and excluding FX differences rose 40% year-on-year to US$181 million. The Group remains highly cash generative, with 1H13 net operating cashflow increasing 89% to US$251 million from US$133 million last year.
Strong Operations in China and Japan
GLP’s market-leading portfolios in China and Japan comprise 468 properties with a total of 10.5 million square metres (“sqm”) (113 million square feet (“sq ft”)) of completed gross floor area (“GFA”). Demand in these markets is robust, with new and expansion leases up 59% quarter-on-quarter to 471,600 sqm (5.1 million sq ft).
GLP’s China portfolio encompasses 12.1 million sqm (130 million sq ft) of GFA, with 6.9 million sqm of completed GFA, up 30% year-on-year. China’s operating results remained strong in 1H13, with same-store net operating income (“NOI”) growth of 10.3% year-on-year. The lease ratio was 90%, remaining stable, with rental rates climbing to the highest level on record to 1.05 RMB/sqm/day. Growth in developments and acquisitions resulted in NAV growing substantially, up 37% year-on-year.
Leasing in China remains upbeat. In 2Q13, new and expansion leases signed totalled 360,000 sqm (3.9 million sq ft), up 30% from the previous quarter. Major new leases signed included 115,300 sqm in Tianjin and Xi’an to Amazon; a combined 49,100 sqm under two lease agreements in Suzhou to Senko, a leading 3rd party logistics services provider, and to one of the world’s largest confectionery, food and beverage conglomerates; and just over 18,000 sqm in Foshan to COFCO, China’s largest food processing, manufacturing and trading company. In addition, GLP signed a strategic partnership agreement with Haier Group to develop state-of-the-art logistic facilities catering to Haier’s requirements for logistic centres across China. GLP initiated development starts of 295,500 sqm (3.2 million sq ft) in 2Q13 and remains confident in meeting its target of 2 million sqm in China for the full year.
GLP’s portfolio in Japan, comprising 84 completed properties, totals 4.1 million sqm (44 million sq ft) of which 3.6 million sqm is completed space, up 28% year-on-year. Demand from customers in Japan continues to be strong, with the portfolio largely fully occupied with a lease ratio of 98%. GLP has prospective tenants lined up to take occupancy back up to 99% in the near future. Rents remained stable at 1,080 Yen/sqm/month, with a high retention rate of 81%.
New and expansion leases signed in Japan totalled 112,000 sqm (1.2 million sq ft), with approximately 39,000 sqm leased in Osaka to Arata Corporation, a major consumer goods retailer, and 21,500 sqm leased in Greater Tokyo to H&M, an international retailer, for their first distribution centre in Japan. The weighted average lease expiry period in Japan remained at 5.4 years.
Mr. Ming Z. Mei, Chief Executive Officer and Co-Founder of GLP, said: “Our progress through the first half was driven by strong demand and the continued growth of our best-in-class fund management platform.”
“The opportunities for growth remain compelling. Demand in China remains high, from both new and existing customers looking to expand efficiently. Our ability to develop projects quickly, leverage our network effect and provide best-in-class solutions will enable us to benefit. The Japan logistics market remains attractive on the back of limited supply of modern facilities. Our entry into Brazil presents a unique opportunity for growth in one of the world’s best markets. GLP is now the leading provider of modern logistics facilities in three of the world’s most attractive markets. We remain confident of leveraging our extensive networks and best-in-class logistics facilities expertise as we continue to grow the business and enhance value for shareholders.”
Strategic Entry into Brazil
GLP continues its strategy of being the leader in the best global markets, announcing today that it has signed an agreement to establish a market-leading position in Brazil through two joint ventures with CPPIB, CIC and GIC. This transaction establishes the largest logistics platform in Brazil with a strong development pipeline for further growth. GLP intends to fund part or all of its initial equity contribution of US$3341 million with a private equity placement. GLP expects to generate a levered IRR of over 18%[3], with fees and promotes providing further upside.
GLP’s entry into Brazil is consistent with the Company’s strategy to focus on only the best markets and grow its fund management platform in partnership with the world’s leading institutional investors. For more information on the Brazil transaction, please refer to the news release and presentations on this subject published on 14 November 2012, available on our website (www.glprop.com).
Growing the Fund Management Platform
GLP announced earlier this month that it has established a J-REIT, focused on owning and operating logistic facilities in Japan, and received approval today for the J-REIT to be listed on the Tokyo Stock Exchange. GLP will contribute 30 of its properties in Japan to the J-REIT (subject to obtaining shareholder approval) for an initial consideration of approximately US$2.6 billion. The expected listing date is 21 December 2012.
In addition to further growing the Company’s fund management platform, this agreement is consistent with GLP’s strategy to recycle capital in order to create and enhance shareholder value. GLP expects to receive net proceeds of approximately US$1.0 billion, which it intends to invest in development projects in China, Japan and other countries. GLP expects to retain an 15% equity stake in the J-REIT.
In October, GLP welcomed Global CBRE Multi Manager Clients into an existing strategic joint venture with CIC, with the sale of a 16.7% shareholding in the JV for approximately US$98 million.
Fund fees in 2Q13 were US$8.6 million, up 59% quarter-on-quarter. GLP’s expansion to Brazil and the pending J-REIT IPO will grow the Company’s fund assets under management three-fold to US$7.2 billion, leading to a significant growth in recurring fee income.
Capital Markets Activities
GLP’s capital base remains healthy, with net debt to assets of 23.5%. GLP continues to strengthen its balance sheet. Year-to-date, GLP refinanced debt of JPY32.0 billion (US$405 million), extending the debt maturities by an average of 7.2 years. In addition, GLP secured a new US$1 billion credit facility at a preferential interest rate with China Merchants Bank. The 10-year, secured credit facility provides for borrowings at a preferential interest rate for onshore and offshore funding requirements for the company’s development needs in China.
Earnings Briefing Information
A briefing for investors and analysts is scheduled on Wednesday, 14th November at 6 pm Singapore time. Please dial +65 6723 9381 to join the briefing (passcode: 39838959) or visit our website (www.glprop.com/webcastPresentations.php) to access our webcast for the event. A replay of the briefing will be available under Investor Relations section of our website: www.glprop.com.
1 The disclosed initial consideration and initial capital call could be revised due to indexation, balance sheet adjustments and other items
2 “Revaluation” refers to the changes in fair value of investment properties of subsidiaries and the share of changes in fair value of investments properties of jointly-controlled entities, net of deferred tax
3 Post taxes, pre-fees and pre-promote
Investor Relations & Media Team
Email: investor.relations@glprop.com
Ambika Goel, CFA
SVP- Capital Markets and Investor Relations
Tel: +65 6643 6372
Email: agoel@glprop.com
DISCLAIMER:
This press release is not an offer of securities for sale or a solicitation of an offer to purchase securities. 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" and similar expressions, and the negatives thereof, are intended to identify 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.
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