SINGAPORE - Mainboard-listed Global Logistic Properties (GLP) reported a 49.4 per cent jump in first quarter earnings on higher asset values, development gains and the continued expansion of its fund management platform.
The provider of modern warehouse faciliies earned a net profit of US$268.1 million (S$368.2 million) for the three months ended June 30, 2015, up from US$179.4 million a year ago.
Revenue grew 12.3 per cent to US$190.2 million, as the group completed development projects in China, and saw increased rents and inclusion of management fee income from the GLP US Income Partners I fund.
This was partially offset by the sale of nine properties in Japan to GLP J-Reit in September last year, and the weakening of the Japanese yen against the US dollar, said GLP. It added that the yen has, on average, fallen 19 per cent against the US dollar.
Said CEO Ming Z Mei: "We have made a solid start to FY16. Against a backdrop of macroeconomic uncertainties, our strong results underscore the quality of our assets and reflect the outstanding work of our team."
"To better reflect the increased uncertainty in China, we have taken a more prudent approach by lowering our development targets in China for FY16."
But, he added, "Our long term outlook for China remains positive and we expect to be able to ramp up development activity in accordance with demand."
GLP recorded 1.1 million square meters (12 million square feet) of new and expansion leases in the quarter, up 48 per cent year-on-year. Tenant retention in the quarter was 70 per cent. GLP said all four of its markets saw rent growth on renewals, led by US at 21 per cent and China at 7 per cent. The group's average lease ratio stood at 92 per cent.
Same-property net operating income grew 22.4 per cent in China, 3.7 per cent in Japan, 8.4 per cent in Brazil and 5.9 per cent in the US.
During the quarter, GLP started US$428 million of new developments , of which it has a 51 per cent share. In the same period, the Group completed US$453 million of developments (GLP share: 44 per cent). This resulted in approximately US$78 million of development gains (pre-tax).
Fund management revenue in in the first quarer jumped 64 per cent year-on-year to US$36 million. This consists of asset and property management fees of US$22 million and development and acquisition fees of US$14 million.
GLP recently established the US$7 billion CLF II, its second China-focused logistics infrastructure fund, with sven major institutions. GLP said CLF II was significantly oversubscribed and expands its fund management platform by 36 per cent to US$27.1 billion.
GLP has also agreed to acquire a US$4.55 billion US warehouse portfolio from Industrial Income Trust with the intention of injecting the portfolio into its fund management platform. GLP expects to own 100 per cent of the portfolio upon closing by November 16, 2015, and pare down its stake to 10 per cent by April 2016. The deal enlarges GLP's US footprint by 50 per cent to 173 million sq ft (16 million sqm), making it the second largest logistics owner and operator in the US within a year of market entry.