One-offs fail to dent underlying Global Logistic Properties’ growth story


Singapore-based Global Logistic Properties (GLP) has grown swiftly over the past decade to become a public company with a market cap of over $9bn, and its latest trading update proves it remains on the right growth path, despite third-quarter profit after tax and minority interests (PATMI) falling 7% year-on-year to $171m.

One-off charges and unfavourable currency trends contributed to that profit drop. On a core basis adjusted for non-recurring items, it said third-quarter earnings were 22% higher, equating to a $172m year-on-year increase, driven by higher asset values from “net operating income growth, growth in operations and the continued expansion of GLP’s fund management platform”.

The industrial real estate owner has attracted several bids since the turn of the year, with chief executive Ming Z Mei, and non-executive director Fang Fenglei, separately having “an interest” in two parties which have each “submitted a non-binding proposal to the company”.

Details of the bids began to emerge in early February 2017, when GLP announced it had “received various non-binding proposals from a number of parties in connection with the strategic review” announced at the end of 2016.

As a result, its market value has risen about 55% since early November 2016.

In its trading update, released on 9 February 2017, Ming said that “demand for GLP’s logistics facilities remains robust globally, with new and renewal leases up 42% year-on-year”.

“New developments are proceeding at a healthy pace, in line with our projections, as we continue to maintain sound investment discipline while growing our portfolio. Our fund management platform continues to deliver strong performance and is a key area of growth going forward,” he added.

Quarterly turnover rose 17% to $232m from $199m one year earlier, while total sales in the year-to-date reached $653m, up 13% year-on-year, with only one quarter left to the end of fiscal 2017.

The fall in core earnings as measured by PATMI was more pronounced in the third quarter than in the first half of the year, during which it fell 3% to $547m from $566m year-on-year.

Customer demand drives its development program, and with the e-commerce boom warehouses are in short supply in many markets, In the third-quarter alone it started “$294m and completed US$337m of development projects”.

It highlighted a “sound investment discipline with a focus on locations that are seeing solid demand and limited supply”. For example, new developments started in China the past quarter included markets that had an average lease ratio of 89%, and with most of its business continuing to be generated there, it has maintained a solid investment-grade rating.

Source: Transport Intelligence, February 14, 2017

Author: Alessandro Pasetti