Global Logistic Properties : 1Q FY2018 RESULTS - EARNINGS CALL TRANSCRIPT

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Ambika Goel Global Logistic Properties Limited - SVP of Capital Markets and IR

Heather Xie Global Logistic Properties Limited - CFO

Ming Z. Mei Global Logistic Properties Limited - CEO & Executive Director

Stephen K. Schutte Global Logistic Properties Limited - COO

Han Zhang Churchill Capital

Harsh Agarwal Deutsche Bank

Company Disclaimer

The information contained in this transcript is a textual representation of the conference call/webcast of Global Logistic Properties Limited (the "Company") in relation to the Company's unaudited financial statements for the three months ended 30 June 2017. This transcript may be edited for grammar and while efforts are made to provide an accurate transcription, there may be material errors, omissions or inaccuracies in the reporting of the substance of the conference call/webcast. This transcript may not contain, and you may not rely on this transcript as providing, all material information concerning the condition (financial or other), earnings, business affairs, business prospects, properties or results of operations of the Company or its subsidiaries. Please refer to the Company's unaudited financial statements for a complete report of the Company's financial performance and position. None of the Company or any of their members, directors, officers, employees or affiliates nor any other person accepts any liability (in negligence, or otherwise) whatsoever for any loss howsoever arising (including, without limitation for any claim, proceedings, action, suits, losses, expenses, damages or costs) from any use of this transcript or its contents or otherwise arising in connection therewith.

Operator

Ladies and gentlemen, thank you for holding, and welcome to the Global Logistic Properties Conference Call. (Operator Instructions)

I would now like to turn our call over to Ms. Ambika Goel, Senior Vice President of Capital Markets & Investor Relations. Please go ahead.

Ambika Goel - Global Logistic Properties Limited - SVP of Capital Markets and IR

Welcome to GLP's first quarter FY '18 earnings briefing. Thanks, everyone, for joining us today. Our presentation materials and webcast are available on our website.

Today, we will hear from our COO, Steve Schutte, who will provide an overview of our results and the proposed privatization.

Steve will be followed by Heather Xie, our CFO, who will run through our financials; and finally, Ming Mei, our CEO, will touch on our strategy and outlook. We will have a Q&A session following our presentation. Please ask your questions via phone or through our webcast.

The focus of today's briefing is to discuss GLP's first quarter FY '18 results. We understand that you may have questions on the proposed privatization announced last month. However, at this point, there is limited information we can provide beyond what has been publicly disclosed. Steve will touch on the Scheme arrangement, but full details of the Scheme will be contained in the Scheme document, which will be dispatched in due course.

Please note that Ming is on the call today in his capacity as CEO; and thus, will not be able to take questions related to the Offeror consortium. All numbers are expressed in U.S. dollars and area is referenced in square meters, unless otherwise stated. Thank you, and I will now hand it over to Steve.

Stephen K. Schutte - Global Logistic Properties Limited - COO

Thank you, Ambika, and good morning, everyone. Thanks for joining us today. We were pleased to report a 27% increase in revenue for the quarter ended June 30, 2017. Earnings for the quarter were 29% lower year-on-year, primarily due to lower revaluations compared to last year, which Heather will touch on more later.

Today, I'll start with an overview of our first quarter highlights, then provide an update on the proposed privatization, and finally, spend a bit more time talking about operations, development and fund management.

For the quarter, GLP continued to execute on its strategy of creating value by providing integrated solutions to grow and serve our logistics ecosystem. The team's focus on this strategy resulted in Group new and renewal leases increasing 35% year-on-year to 3.3 million square meters and same- property net operating income growing by 5.2%.

On the development front, we continued to maintain sound investment discipline and remained on track to meet our full year global development targets of $2.2 billion of development starts and $1.7 billion of development completions.

Finally, our fund management business continues to grow, delivering higher recurring income from fees. And, we have completed the syndication of our third U.S. portfolio following the receipt of regulatory approvals, including CFIUS.

With that overview, next, I want to touch on the proposed privatization of GLP.

Nesta Investment Holdings has proposed acquiring all shares of GLP through a Scheme of Arrangement. This follows the strategic review undertaken by the company and overseen by the four independent directors who constituted the Special Committee.

Nesta is owned by a consortium comprising GLP's CEO Ming Mei, HOPU, Hillhouse Capital, Bank of China Group Investment and Vanke. The Scheme Consideration is SGD 3.38 per share, and shareholders will also be entitled to receive the FY '17 dividend of SGD 0.06 per share, which will be paid out on August 22.

GLP's financial adviser, JPMorgan, has advised that the Scheme Consideration is fair to shareholders from a financial standpoint, which is why the Independent Directors have made a preliminary recommendation to shareholders to vote in favor of the Scheme.

On August 2, we announced that Evercore has been appointed as independent financial adviser to advise the Independent Directors. In due course, the Independent Directors will make a final recommendation to Shareholders in the Scheme Document, after the advice of the IFA is received.

A Scheme Meeting will be called in due course, during which, more than 50% of shareholders present and voting in person or by proxy would need to approve the Scheme. This is the headcount condition, and we strongly encourage all shareholders to send in their votes, as they will be very important to a successful process.

Additionally, the shareholders who vote in favor would need to hold at least 75% in value of all shares voted by the shareholders present in voting. During this process, the Offeror and its concert parties will not be voting, which represents roughly 11% of shares outstanding.

And we do note that GIC, which holds 36.84% of shares outstanding, has provided an irrevocable undertaking to vote in favor of the Scheme, further details of which are set out in the Joint Announcement.

If you have any questions on how the process works or the importance of every vote, please reach out to Ambika and the IR team.

With some of these highlights of where we are today in mind, I want to touch on a few of the key reasons why this Offeror was selected, which you can see on Slide 4.

First, price. The Scheme offers price certainty at significant premiums to historical prices in valuation, whether looking at the last undisturbed share price or at the 1-, 3-, 6- or 12-month volume weighted average price. In fact, at SGD 3.38 per share, the Scheme Consideration is 81% over the 12-month average price and 30% over our March 31 NAV per share.