Global Logistic Properties eyes US$960mn development projects in Brazil, Japan

That's 0.71mn sqm GFA development.

According to Philip Securities Research, Global Logistics Properties targets 0.4 mn sqm and 0.31 mn sqm (or 0.71mn sqm) GFA development starts respectively in Japan and Brazil, with an estimated gross project cost of US$960mn. 

It noted that following the earlier monetization of 33 properties to J-REIT, GLP has US$1.96 bn cash on hand and a low net debt to asset ratio of 8.2%. Management indicated monetization of the remaining Japan stabilized properties could be considered before borrowing further debt to finance development projects. 

Here's more:

The group announced FY13 PATMI excl. revaluation of US$350mn, up 11.4% y-y. Total revenue reported was US$642mn, up 13.5% y-y mainly on strong rental growth in China from newly completed properties.

The company met its FY13 whole year target of 2.0 mn sqm GFA development start, and target another 2.5 mn sqm development start in FY14. This further consolidates their market leadership, while enhancing network effect and economy of scale.

How do we view this?
The company has strong business fundamentals. The strong cash position and potential capital recycling through Japan property monetization would ensure rich liquidity for future development.

Some developments previously scheduled for completion in FY13 were delayed to FY14. We therefore expect strong project completions in the following few quarters and hence significant fair value gain on project completion in FY14.

Leasing activities in China remains upbeat, driven by3PL and E-commerce, despite the nation’s retail growth moderating slightly in the first 4 months of CY13. Potential further weakening of Yen could weigh on GLP’s Japan rental income and exert downward pressure on the property valuation through currency translation.

There is currently no concrete evidence that the Japanese government’s aggressive monetary loosening has stirred up the nation’s real economy.