GLP J-Reit buying 4 Japan properties for 42.7b yen
Global Logistic Properties, which has sold its stake in another asset in June, expects to realise US$130m of cash profit from the dispositions
Singapore
MAINBOARD-listed Global Logistic Properties (GLP), a fund manager and global provider of modern logistics facilities, is selling four properties in Japan to GLP J-Reit for 42.7 billion yen (S$571 million) as part of its capital-recycling strategy.
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).
GLP J-Reit, a real estate investment trust listed on the Tokyo Stock Exchange in December 2012, is focused on operating logistics properties in Japan, while GLP is the property and asset manager of the J-Reit.
This transaction follows the sale of GLP's 50 per cent stake in 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, GLP's chief executive, said the transaction demonstrated how GLP was 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 and 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 and GLP said it will deploy the majority of its capital to these two markets while focusing on being the best operator.
GLP said its US$37 billion fund management platform provides a recurring source of income that is growing consistently every year, and is also one of its main sources of capital to fund growth.
It added that GLP J-Reit has the right of first look on a further 17 properties (US$2 billion) that it wholly owns.
