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3 Things Investors Should Know About Global Logistic Properties Ltd

property

Global Logistic Properties Ltd (SGX: MC0) is a provider of modern logistics facilities in China, Japan, and Brazil. It is largely owned by the Government of Singapore Investment Corp (GIC) and is part of the Straits Times Index (SGX: ^STI).

Yesterday, the firm released presentation slides for an investor meeting in Sydney to be held on Thursday and Friday this week. Let’s take a look at three important aspects of the company’s business investors should take note of.

1. Links with China Materials Storage and Transportation Development Company (CMSTD)

On 4 August this year, Global Logistic Properties revealed that it had formed a strategic partnership with CMSTD, China’s largest state-owned warehouse logistics provider. The partnership will have two components to it: 1) a joint-venture; and 2) an equity investment.

Under the first component, Global Logistic Properties and CMSTD will form a 49:51 joint-venture with the former having the option to increase its stake in the joint-venture by a further 1%. Over RMB3.6 billion (US$583 million) is slated to be invested for the joint-venture to acquire an initial pipeline of 2.7 million square meters of land with 1.3 million square meters of buildable area.

Under the equity investment portion, Global Logistic Properties will invest RMB2 billion (US$324 million) to acquire a 15.3% stake in CMSTD. The transaction would make Global Logistic Properties the second largest shareholder of CMSTD.

All told, the partnership will enable GLP to get access to CMSTD’s total land resource of more than 9 million square meters.

2. First quarter results

In Global Logistic Properties’ latest first quarter results for the fiscal year ending 31 March 2015, quarterly revenue grew 18% year-on-year to US$169.3 million while profit after taxes and minority interests (PATMI) fell 12% to US$179.4 million. Despite the fall in profit, it is notable that the company’s assets under management had increased to US$11.4 billion from US$8.1 billion a year ago; its fees from funds had also surged 72% year-on-year to US$22 million.

The firm also ended 30 June 2014 with a low leverage ratio (total debt to assets) of just 19.1%.

3. Future growth

The presentation also touched on the company’s growth catalysts. These include:

a) The sale of US$529 million worth of assets to GLP J-REIT. This month, the real estate investment trust, which is the largest of its kind in Japan, agreed to purchase nine wholly-owned assets from Global Logistic Properties with a total area of 237,000 square meters. The deal is anticipated to be completed next month. Global Logistic Properties intends to use the capital obtained from the sale to fund further development in China, Japan, and Brazil.

b) US$4.0 billion worth of uncalled capital for the comany’s fund management platform

c) The US$1.1 billion acquisition of a portfolio of properties from Brazilian firm BR Properties. The acquired properties have a leasable area of 865,000 square meters and a revenue yield of 9.6%. Post-acquisition, the market-leading position of Global Logistic Properties in Brazil as a provider of modern logistic facilities will be further strengthened as the company would be four times larger than its nearest competitor.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.