GLP CEO Ming Mei flew in from China specially to speak to attendees at I.CON: Trends and Forecasts. In a “fireside chat” with Craig Meyer, president of industrial with JLL, this young CRE luminary talked in depth about how GLP got its start, where the company is headed, and what impact it will have on the industry as it continues to expand.
Meyer: Tell us about the founding of GLP.
Mei: In 2008, every real estate company was in a tough spot, especially by December 2008 when everyone thought banks would be frozen indefinitely. I proposed to Prologis, Inc., that they sell their Asia properties, which they did for $1.3 billion in cash. That paid the company’s maturing debt, leading to the launch of Global Logistics Properties, or GLP. Today, GLP has $35 billion in assets and 600 million square feet; one-third in the U.S., one-third in China, and the balance across the globe. On a given day, the company is developing 100,000 square feet.
Meyer: You are the largest industrial player in China by a wide margin. How does the partnership work with the Chinese government?
Mei: We are number one in China now and bigger than the next 20 combined. The land is mainly owned by the Chinese government. We partner and buy land from them, but they aren’t part of the development business.
Meyer: Talk about the company’s financial performance.
Mei: Our balance sheet is leveraged less than 20 percent. Over the last six years, we’ve put together a fund management platform. In the U.S., we have $13 billion of assets under management. We also have funds in Brazil and China. We focus solely on industrial – no office, residential or retail.
Meyer: Jeffrey Schwartz, founder of Prologis, Inc., died in 2014. What influence did he have on you?
Mei: He was an amazing partner who took some risky bets on young people – I’m one of them. He hired me when I was 29 and had no real estate experience, and he fully supported me. I wish I had his courage, but I learned from him how to take bets on people and stand with them.
Meyer: Do you see another level of significant transactions in the U.S.?
Mei: We aren’t going to see $5 billion to 8 billion transactions much, but there will be some smaller deals. Our goal is to be the capital partner for some of these developers. We are a development company by nature, but coming to the U.S. is different. No matter how good we get, we’ll never have the relationships that local developers have, so I’d rather be a capital partner and participate alongside local developers to build the core. Our team is putting together a program to partner with local developers.
Meyer: Tell us a profile of a typical deal, and who is your biggest tenant?
Mei: Anywhere from a build-to-suit to a spec building in a good market with strong demand would be interesting to us. We are in business in markets with populations of more than 1 million people. Amazon.com Inc. is the number one customer for us in the U.S., and was in China until recently.
Meyer: Talk about your global strategy. What is your view on doing business in emerging areas across the world?
Mei: A market must be deep enough for us to make a meaningful investment, so our options are limited for more expansion. There is some opportunity in Europe. Others suggest we go into India, but I don’t know if it’s a good move for us today. At the end of this year, I think there will be some portfolios up for grabs, either by IPO or for sale. Based on the cap rate, I think Europe is about a year behind the U.S. We’ve been watching the market in Europe and expect some opportunity there.
Meyer: What is your “crystal ball” perspective on the world economy?
Mei: Make sure you match your debt to the asset and hold it long enough to weather one or two up-and-downs. The rest … who knows? We can’t control what’s happening in Asia or Europe. I can’t control it. The only thing I can control is how long I manage the investment.