GLP facilities in Japan to be fully operational in June

Global Logistic Properties (GLP) said its Japanese operations are back on, after being hit by the Japanese earthquake in March.

It said its warehouse in Sendai, the epicentre of the earthquake, should be up and running by end of June.

GLP said there will be high demand for modern logistic facilities once Japan begins rebuilding its supply chain networks.

The Japanese earthquake in March caused minor damage to GLP’s properties, sustaining damages of nearly US$42 million, less than 0.8 per cent of its entire portfolio of US$6.3 billion.

Now that supply chain operations have recovered, GLP said it has since leased out almost all of its space in Japan.

“If there is any disruption on the supply chain and the global supply chain, companies do believe in a buffer or safety stock, and there’s a movement we believe goes back towards that, and that drives demand for our space, frankly throughout Asia,” said Jeffrey H. Schwartz, co-founder of GLP.

“In Japan, what we are seeing from the earthquake is a drive for increased space. We were 97 per cent leased before the earthquake, but we are 99.2 per cent leased now,” he added.

Still, the logistics firm is keen on making China its biggest market going forward.

Between Japan and China, GLP said China will be the biggest driver of GLP’s revenue over the long term.

GLP’s Chinese properties now accounts for 21 per cent of the firm’s total revenue.

“Certainly in the next 3 to 5 years, we expect that China will be at an equivalent level to Japan. China and Japan’s revenue contributions will be about 50 per cent each but we want China’s share to surpass that long term,” said Schwartz.

With China’s rapid growth in retail spending, analysts said more distribution centres are required to house more consumer items.

And higher demand for such logistic properties will stoke rentals.

“Specifically for China, we are expecting about 10 to 15 per cent of rental growth in 2011. Chinese shoppers’ tastes are getting increasingly sophisticated, and there is a larger requirement for higher tier goods as well,” said Ong Kah Seng, senior manager of Research (Asia Pacific), Cushman & Wakefield.

GLP posted a revaluation-adjusted profit of US$59.8 million for its fourth quarter ended March 2011,up 13.5 per cent from one year ago.

Analysts from Nomura and DBS Vickers have issued a buy call on GLP stock.

Source : Channel NewsAsia – 1 Jun 2011

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