Global Logistics Properties bullish despite 30% net profit dip to $136.8m

First 3% positive rental reversion since 2002.

Despite Global Logistics Properties reporting 30% y-o-y lower net profit (after capital securities distribution) of $136.8m on a 19% drop in revenue to $140m due to divestment of assets into GLP J-REIT, it was in reality a strong quarter, according to DBS Vickers.

"On a more comparable q-o-q basis, revenue improved 2% while net profit showed a 30% decline, impacted by lower revaluations and forex gains. Excluding revaluations and forex, PATMI was actually 17% higher q-o-q," DBS Vickers said.

The research firm said the strong performance was underpinned by a 2% pt increase in China occupancy to 90% and higher average rents of Rmb1.1/sm/day. In Japan, occupancy was 99%.

"More importantly, the group was able to enjoy 3% positive rental reversion, its first since 2002. In Brazil, lease up rates was a healthy 95%. During the quarter the group tied up new leases of 575,000sm in China, bringing 1H take up rate to 0.7msm and on track to achieve a lease up rate of 1.1msm for the year. Renewal rents continue to grow at 6.9% on year," reckoned DBS Vickers.

"Looking ahead, the group is en route to delivering strong portfolio expansion as operating environment remains robust with strong take up in China while in Japan, positive rental reversion is underpinned by a strong appetite for space. With 1.1msm of development starts in 1HFY14, the group is on track to achieve development starts of up to 2.5msm for the year. This will underpin its NAV expansion," it added.