Global Logistics Properties (GLP), a global provider of modern logistics facilities, will sell four properties in Japan to GLP J-REIT for JPY42.7 billion ($420 million). The sale price is 3 per cent higher than the latest appraisal values and equates to a weighted average cap rate of 4.8 per cent.
GLP, which is an owner-operator, fund manager and developer of logistics facilities, recently sold its 50 per cent share of GLP MFLP Ichikawa Shiohama to GLP J-REIT.
GLP J-REIT, listed on the Tokyo Stock Exchange since December 2012, is a real estate investment trust focused on operating logistics properties in Japan. GLP is the property and asset manager of the J-REIT. GLP J-REIT has the right of first look on a further 17 properties ($2 billion) wholly owned by GLP.
On the basis of presentations filed with the Singapore bourse, Japanese asset sales year-to-date for the company amount to $572 million, with a cash profit of $130 million, a net IRR of 45 per cent and a development profit margin of 44 per cent.
In a media release, GLP stated that it expects to realise $130 million of cash profit from these dispositions upon completion in September 2016. This includes the crystallisation of $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 fully leased and generated a development profit margin of 44 per cent.
Ming Z. Mei, chief executive of GLP, said, “This 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 crystallizing development profit and growing fund management AUM to generate higher recurring income from management fees.”
The dispositions of these five assets generated a net levered property IRR of 27 per cent (before fees and promotes). Net sale proceeds for GLP are estimated to be approximately JPY26 billion ($254 million), which GLP plans to reinvest into development in Japan.
For GLP, China and Japan continue to represent the most attractive markets for development, with the firm intending to deploy the majority of its capital to these two markets while focusing on being the best operator.