Global Logistic Properties : 2Q FY2018 RESULTS - EARNINGS CALL TRANSCRIPT

THOMSON REUTERS STREETEVENTS

EDITED TRANSCRIPT

MC0.SI - Q2 2018 Global Logistic Properties Ltd Earnings Call

EVENT DATE/TIME: NOVEMBER 10, 2017 / 9:00AM SGT

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

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

Stephen Schutte Global Logistic Properties Limited - COO

Kazuhiro Tsutsumi Global Logistic Properties Limited - Global Treasurer, CFO of GLP Japan

Heather Xie Global Logistic Properties Limited - CFO

Harsh Agarwal Deutsche Bank AG, Research Division - Head of Asia Credit Research Michael Lim UBS Investment Bank, Research Division - Director and Research Analyst Yew Kiang Wong CLSA Limited, Research Division - Research Analyst

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 September 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'd now like to turn the 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 second quarter FY '18 earnings briefing. Thanks everyone for joining us today. Our presentation materials and webcast are available on our website.

Our senior management team is on the call today to discuss second quarter results and the proposed

privatization. Ming will cover GLP's strategy and performance for the quarter; Steve will discuss our entry into Europe and provide an update on the proposed privatization; and then Heather will run through our financials. We also have Kaz with us on the call today, and the team is available to answer questions following our presentation. (Operator Instructions)

Please note that GLP is bound by the rules of the Singapore Take-over Code and we can only discuss information which has been publicly disclosed. Please also note that Ming is on the call today in his capacity as CEO, and thus, he will not be able to take questions related to Nesta Investment Holdings. 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 over to Ming.

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

Well, thank you, Ambika, and thank you all for joining today. During the quarter, the team continued to focus on executing our growth strategy. We continue to focus on being the best operator, creating value through development and continued expanding our fund management platform. The solid results we achieved this quarter reflect this focus.

We are pleased to report earnings growth of 34% year-on-year in the second quarter of financial year 2018. Our high quality portfolio continue to generate stable, recurring income. Our group lease ratio increased 1% quarter-on-quarter to 91%. Same-store NOI grew 4.6%, led by 11.4% growth in China and our weighted average lease expiry stands at 3.5 years overall. We continue to focus on creating a logistics ecosystem for the future through big data technologies and innovative space solutions.

In our development business, we continue to focus on creating value. We target to start $2.2 billion this year and complete $1.7 billion of projects. So far, we have achieved 25% of our starts and 49% of our completion targets. This is in line with our expectations. We typically see developments pickup in the second half of the year and we remain confident of meeting the full year target.

Finally, we continue to execute on our long-term strategy of expanding our fund management platform. Our platform stands at $39 billion and continues to perform well. Last month, we announced our entry into Europe. This is a market which we have been looking at for a while. The

$2.8 billion Gazeley portfolio adds a premier operational and development platform for GLP. The portfolio will be injected into GLP's fund management platform. Demand from partners outstripped the amount available for investment and we expect the portfolio to be fully syndicated by April 2018. And Steve will add more color on this shortly.

For the first half of the year, fund fees were $98 million. This is up 9% year-on-year. Our fund

management platform will continue to be a key part of our business, and it provides a platform for us to fund official growth.

Today, we announced several executive appointments. These changes strengthen our global leadership position. They are what's right for the business and highlight the fact that our executives have the room to progress their career with us.

Our current CFO, Heather, will be taking on the fresh challenge of being Head of GLP Financial Services, a new business unit that provides financial solutions to our customers in China. Heather's experience will be vital to the success of this business unit, which is a crucial element of our goal to create a logistics ecosystem.

Kaz has been appointed CFO, effective January 1st, 2018. This is a natural next step for Kaz, given his existing roles as Global Treasurer and CFO of GLP Japan. Kaz and Heather have been working closely together on the strategy to financially position GLP for further global growth, enabling a smooth transition.

Steve, our Chief Operating Officer, will continue to oversee our global operations and is relocating from Singapore to Chicago. This is a strategic move to support the expansion of our business in the

U.S. and in Europe.

We have appointed Alan Yang as GLP's Chief Investment Officer. This is an extension of the work he has been doing already. Alan was instrumental in GLP's entry into the U.S. and Europe. He will continue to oversee all investment activity across GLP and chair the Investment Committee from Los Angeles.

Each of these management changes position our company for further global expansion and highlights the depth of talent we have within GLP.

Please turn to Slide 4. Our financial position remains healthy, supported by solid cash flow from operations and fund fees, $1 billion cash on hand at the end of September and additional credit facilities. Our business model gives us financial flexibility. Through our fund management platform, we are able to recycle capital from mature, stabilized properties, and use the proceeds to fund new development and acquisitions. This way, we are able to maintain a strong balance sheet even as we grow.

We have recycled close to $7 billion worth of assets over the last 5 years, and we have the capacity to do more. We're able to execute multiple funding levers, including more asset sales to the JV; establishing potential China acquisition funds and income funds; syndicating new and existing portfolios including Europe; and establishing of new funds and REITs.

And with that, I'll turn it over to Steve.