A method of making a bonded intermediate substrate includes forming a weak interface in a GaN source substrate by implanting ions into an N-terminated surface of the GaN source substrate, bonding the N-terminated surface of the GaN source substrate to a handle substrate, and exfoliating a thin GaN single crystal layer from the source substrate such that the thin GaN exfoliated single crystal layer remains bonded to the handle substrate and a Ga-terminated surface of the thin GaN single crystal layer is exposed. The method further includes depositing a capping layer directly onto the exposed surface of the thin GaN single crystal layer, and annealing the thin GaN single crystal layer in a nitrogen containing atmosphere after depositing the capping layer. The in-plane strain present in the thin GaN single crystal layer after the annealing is reduced relative to an in-plane strain present in said layer prior to the annealing.