MAINBOARD-LISTED GLP, global provider of modern logistics facilities, will sell four properties in Japan to GLP J-Reit (real estate investment trust) for 42.7 billion yen (S$571 million).
The sale price is 3 per cent higher than latest appraisal values and equates to a weighted average cap rate of 4.8 per cent, the company on Tuesday said in a filing to the Singapore Exchange (SGX).
This transaction follows the sale of GLP's 50 per cent stake of GLP・MFLP Ichikawa Shiohama to GLP J-Reit announced in June 2016.
GLP expects to realise US$130 million of cash profit from these dispositions upon completion in September 2016. This includes the crystallisation of US$100 million of development profit (GLP share, pre-tax) from three development projects - GLP Atsugi II, GLP Yoshimi and GLP・MFLP Ichikawa Shiohama - which are 100 per cent leased and generated a development profit margin of 44 per cent.
Ming Z Mei, CEO of GLP, said the transaction demonstrates how GLP is able to leverage its fund management platform to unlock value and generate the best possible returns. "Looking ahead, we will continue our capital recycling strategy to achieve the dual aims of crystallising development profit and growing fund management AUM (asset under management) to generate higher recurring income from management fees."
The dispositions of these five assets generated a net levered property internal rate of return (IRR) of 27 per cent before fees, among other things.
Net sale proceeds for GLP are estimated to be about 26 billion yen, which it plans to reinvest into development in Japan.
China and Japan represent the most attractive markets for development. GLP said it will deploy the majority of its capital to these two markets while focusing on being the best operator.
GLP's US$37 billion fund management platform provides a recurring source of income that is growing consistently every year. It is also one of GLP's main sources of capital to fund growth.
GLP J-Reit, listed on the Tokyo Stock Exchange in December 2012, is a Reit focused on operating logistics properties in Japan, while GLP is the property and asset manager of the J-Reit.
The group said GLP J-Reit has the right of first look on a further 17 properties (US$2 billion) wholly owned by GLP.