In the News
GLP's Sees Lot More Room for Fund Business
Source: The Business Times
By Lynette Khoo
Global Logistic Properties (GLP) is revving up growth through its fund management platform, with plans afoot to further expand in the US by acquiring asset portfolios in the billion dollar range, said group CEO Ming Z Mei.
GLP is also starting to deploy its second China development fund of US$7 billion that was raised in July 2015, while monetising stabilised logistic assets in China through a private fund.
"There's a lot of room to grow the fund business in all the markets we are operating in," Mr Mei said. "In the US, we have grown to the second largest provider/manager of assets within a year and a half. There is still a lot of room to grow there."
GLP will continue to recycle capital through its fund management platform, particularly from existing assets in Japan and China, he said.
In China where an effective Reit regime is almost non-existent for now, GLP intends to monetise its assets either through selling to a private fund or an income fund.
Mr Mei said: "In the long run, we believe China will develop a Reit market because the citizens are looking for cash-yield type of investment products. But for now, we will use private vehicles targeting insurance companies and pension funds, just as we have done so in the US and Brazil."
GLP's fund management platform first came into being in fiscal 2012 when it launched a development fund and an income fund in Japan. It also listed GLP J-Reit, one of Japan's largest real estate IPOs, in December 2012.
This was followed by the launch of two development funds in China with combined assets under management (AUM) of US$10 billion, and two income funds in the US with a combined AUM of US$12.9 billion. In Brazil, GLP has launched one development fund and two income funds totalling US$2.5 billion in AUM. It launched its second development fund in Japan worth US$2.1 billion in February this year.
While development projects currently offer an average 25 per cent margin on completion, having capital partners lowers GLP's development risks and enhances its returns by 300 to 500 basis points through recurring fees and performance fees. The fund management model also allows GLP to raise its returns for stabilised assets through capital recycling.
Source: The Business Times © Singapore Press Holdings Limited. Permission required for reproduction