SINGAPORE (Aug 16): GLP, the provider of modern logistics facilities, will sell four properties in Japan to GLP J-REIT for JPY42.7 billion (S$563 million).

The sale price is 3% higher than latest appraisal values and equates to a weighted average cap rate of 4.8%.

This transaction follows the sale of GLP‘s 50% share 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% leased and generated a development profit margin of 44%.

In its filing, Ming Z. Mei, Chief Executive Officer 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 dual aims of crystallising development profit and growing fund management AUM to generate higher recurring income from management fees,” says Ming

The dispositions of these five assets generated a net levered property IRR of 27% (before fees and promotes). Net sale proceeds for GLP are estimated to be approximately JPY26 billion, which GLP plans to reinvest into development in Japan.

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 wholly-owned by GLP.

GLP closed at S$1.92 on Tuesday.