GLP reported a 52% increase in earnings (PATMI – Profit After Tax and Minority Interests) for the three months ended 30 September 2016 (2Q FY17). Results were driven by the continued expansion of GLP’s fund management platform.
Mr. Ming Z. Mei, Chief Executive Officer of GLP 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.”
1H FY17 earnings were US$376m, 2% lower than the prior year period due to foreign exchange losses. On a core basis (adjusted for non-recurring items), 1H FY17 earnings were up 17% year-on-year, driven by growth in China operations and the continued expansion of GLP’s fund management platform.
Group same-property net operating income (NOI) was up 7.5% in 1H FY17. GLP’s average lease ratio increased 1% quarter-on-quarter to 92%, driven by a higher lease ratio in China. Leasing demand remained stable globally, with 3.3m sq m of new and renewal leases signed in 2Q FY17, up 21% year-on-year. Rent growth on renewal leases was up 11.3% globally, led by US and China. Customer retention increased 2% quarter-on-quarter to 73%.
GLP’s lease ratio in China was 87%, up from 86% last quarter. GLP expects its China operations to remain stable in the near term. The mid to long term outlook for China remains positive, supported by strong secular drivers such as e-commerce and organized retail. GLP’s lease ratios in Japan and the US remained high at 98% and 94% respectively, with effective rent growth of 19.6% and 4.5%. GLP’s lease ratio in Brazil stood at 89% and is expected to remain stable. In 2Q FY17, average cap rates in Brazil and US compressed by 25 and 7 basis points respectively.
GLP’s fund management business represents a recurring source of income that is growing consistently every year. 2Q FY17 fund management fees were US$47m, up 25% year-on-year. This comprised asset and property management fees of US$31m and development fees of US$16m, generated from approximately US$26bn of invested capital. GLP’s fund management platform has US$12bn of uncalled capital, which will generate additional fund management fees as it is invested.
GLP’s US$38bn Assets Under Management (AUM) platform comprises 15 private capital partners. The fund management business provides GLP with a platform to monetize development profit and recycle capital. Demand from institutional investors to partner with GLP remains strong and the company expects to continue leveraging its fund management platform for strategic expansion.
In September 2016, GLP announced that it would be acquiring its third US logistics portfolio. Fund syndication for the US$1.1bn portfolio is oversubscribed on the back of strong investor demand. GLP remains on track to complete its initial closing of the portfolio in December 2016 with capital partners.