Singapore

GLOBAL Logistic Properties (GLP) will make a 4.9 billion yen (S$64.2 million) development profit, or a margin of 46 per cent, from the sale of an asset to GLP J-Reit.

The company said on Thursday that it was selling its 50 per cent share of GLP-MFLP Ichikawa Shiohama to the Reit for about 15.5 billion yen.

The 122,000 square metre property is a joint venture with Mitsui Fudosan along the Tokyo Bay Area that was completed in January 2014 and fully leased to global retailers such as Rakuten, H& M and Forever 21.

GLP Japan president Yoshiyuki Chosa said: " This transaction creates considerable value for GLP and highlights the embedded value of our development pipeline."

The sale price, based on a 4.5 per cent capitalisation rate, is in line with the latest appraisal value as at March 31, 2016 . The transaction is expected to be completed in September 2016.

The divestment generates a net levered property internal rate of return (IRR) of 23 per cent (before fees) since construction began in December 2012.

GLP J-Reit has the right of first look on a further 20 properties worth US$2.2 billion wholly owned by GLP.

Backed by single-largest shareholder GIC, GLP has a US$36 billion property portfolio spanning 52 million sq m of logistics facilities across China, Japan, the US and Brazil. In the US, GLP is the second-largest logistics property owner and operator.

Some 66 per cent of GLP' s assets today are managed within funds and this is expected to grow as the group executes its capital recycling strategy and grow its fund management platform.

The group had told BT recently that it is also looking to monetise its assets in China either through selling to a private fund or an income fund.

GLP said in its annual report for fiscal 2016 ended March 31 that its fund management platform has US$11 billion of investment capacity. Also some 10 per cent of its China portfolio is located in prime locations that can potentially be repositioned for commercial development.

It now has two projects in Shanghai and Beijing actively undergoing planning approval and consultation, with 10 other projects across the country which could be converted to commercial uses over the medium to long term.

As of March 31, GLP' s average lease ratio stood at 92 per cent, having recorded 9.8 million sq m of new and renewal leases for the year, up 23 per cent from the year before. Since then, it has signed new leases - another 349,000 sq m in China, 20,000 sq m in Brazil, 32,000 sq m in the US, and 214,000 sq m in Japan in recent months.

On Thursday, shares of GLP closed 1.4 per cent higher at S$1.805.