GLP chalks up 52% rise in Q2 as China rentals climb

A GLP property in Hefei, China's Anhui province. GLP says its average lease ratio rose 1 per cent quarter on quarter to 92 per cent, driven by a higher lease ratio in China.
A GLP property in Hefei, China's Anhui province. GLP says its average lease ratio rose 1 per cent quarter on quarter to 92 per cent, driven by a higher lease ratio in China.PHOTO: GLOBAL LOGISTICS PROPERTIES

Provider of logistics facilities says jump spurred by expansion of fund management platform

Global Logistic Properties (GLP), a provider of modern logistics facilities, has posted a 51.8 per cent jump in second-quarter earnings to US$173.1 million (S$240.5 million), driven by the continued expansion of its fund management platform.

Revenue for the three months to Sept 30 rose by 12.9 per cent to US$213.7 million year on year.

The strong showing was attributed to the completion and stabilisation of development projects in China with increasing rents, higher management fee income from the inclusion of GLP US Income Partners II and growth in Japan, as well as the strengthening of the yen against the US dollar.

However, net profit for the first six months dipped 1.6 per cent year on year to US$376 million, owing to foreign exchange losses. Revenue for the half year rose 10.7 per cent to US$420.2 million.

GLP chief executive Ming Z Mei said: "The team achieved strong results underpinned by recurring income from operations, development and fund management.

"Our business is supported by long-term structural trends in domestic consumption. We maintain strong investment discipline and see room for cap rates to compress further in this financial year."

  • AT A GLANCE

  • NET PROFIT: US$173.1 million (+51.8%)

    REVENUE: US$213.7 million (+12.9%)

GLP said its average lease ratio increased 1 per cent quarter on quarter to 92 per cent, driven by a higher lease ratio in China. Leasing demand remained stable globally, with 3.3 million sq m of new and renewal leases signed in the second quarter, up 21 per cent year on year.

Rent growth on renewal leases was up 11.3 per cent globally, led by the US and China. Customer retention increased 2 per cent quarter on quarter to 73 per cent.

In the second quarter, GLP started US$459 million of developments and completed US$428 million of projects, mainly in China. GLP said the new developments in China were in markets that had an average lease ratio of 92 per cent.

GLP said it generated US$63 million of development profit in the quarter and met 64 per cent of its full-year development profit target of US$200 million.

The company said its fund management fees for the second quarter rose 25 per cent year on year to US$47 million. This comprised asset and property management fees of US$31 million and development fees of US$16 million, generated from approximately US$26 billion of invested capital. GLP said it has US$12 billion of uncalled capital, which will generate additional fund management fees as it is invested.

Earnings per share for the quarter was 3.53 US cents, up from 2.22 US cents a year earlier. Net asset value per share was US$1.96 as at Sept 30, up from US$1.87 as at March 31.

GLP shares rose six cents or 2.9 per cent to $2.10 before the results were announced.

A version of this article appeared in the print edition of The Straits Times on November 09, 2016, with the headline 'GLP chalks up 52% rise in Q2 as China rentals climb'. Print Edition | Subscribe