GLP's Q2 net profit up 25.3% to $307.22m

Due to the continued expansion of its fund management platform.

Global Logistics Properties, the leading global provider of modern logistics facilities, reported a 25.3% increase in net earnings for the three months ending in September 30. Results were driven by the continued expansion of GLP's fund management platform.

GLP Chief Executive Officer Ming Z. Mei said the group achieved strong results supported by the recurring income from its operations and development and fund management.

Due to the continued expansion of its fund management platform.

GLP Chief Executive Officer Ming Z. Mei said the group achieved strong results supported by the recurring income from its operations and 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," Mei noted.

The group stated that its fund management business represents a recurring source of income that is growing consistently every year. 2Q FY17 fund management fees were US$47 million, up 25% YoY. 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's fund management platform has US$12 billion of uncalled capital, which will generate additional fund management fees as it is invested.

Meanwhile, GLP's same-property net operating income 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 3.3 million sqm (36 million square feet) 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-quarterto 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. Its lease ratios in Japan and US remain high at 98% and 94% respectively, with high 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.

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