Industrial giant ESR has announced a first closing of A$540 million ($352.6 million) for the second iteration of its Australian develop-to-hold logistics partnership alongside GIC, with the Singapore sovereign wealth fund committing A$490 million as the strategy’s cornerstone investor.
The Hong Kong-listed alternative asset manager is targeting a fund size of A$1 billion for ESR Australia Development Partnership II, which aims to deliver premium, sustainable industrial estates with a human-centric design, ESR said Thursday in a release.
EADP II is the follow-up to the 2020-vintage ESR Australia Development Partnership. EADP has fully allocated its A$1 billion in equity commitments from partners including GIC and other sovereign investors, life insurance funds and ESR’s Pan Asia Fund.
“The launch of EADP II builds on our excellent fund management track record in Australia, demonstrating our ability to offer capital partners strong investment options with high-quality returns,” said ESR co-founders and co-CEOs Stuart Gibson and Jeffrey Shen. “It is also a testament to our competitive edge as APAC’s largest real asset manager with an integrated fund management platform that enables investors to access attractive secular growth opportunities propelled by e-commerce and digital transformation.”
EADP’s Full Deployment
GIC previously committed A$400 million to EADP as the cornerstone investor, with ESR contributing an unspecified amount in return for a 60 percent stake in the venture.
All of EADP’s equity has been allocated across eight projects in Sydney, Melbourne and Brisbane at an expected end value of A$2.6 billion, ESR said. Significant projects held by the fund include ESR Horsley Logistics Park in Sydney, ESR Green Link Estate in Melbourne and Acacia Ridge Business Park in Brisbane.
ESR acquired the Horsley Park site in 2019 for A$142.5 million and is developing a distribution facility with 111,000 square metres (almost 1.2 million square feet) of warehouse space and an expected end value of more than A$320 million.
The group purchased the development parcel for ESR Green Link Estate for an undisclosed amount in 2020 and has since revealed plans to build a logistics hub with 230,000 square metres of floor area and an expected end value of A$450 million. French shipping provider CEVA Logistics has signed up to lease 37,000 square metres at the facility as an anchor tenant.
“Following the successful deployment of EADP capital, EADP II will look to extend the develop-to-core strategy providing investors the opportunity to take advantage of ESR Australia’s proven development capabilities and access a modern portfolio of high-quality strategically located logistics assets with strong ESG credentials as their foundation,” said ESR Australia CEO Phil Pearce.
ESR Australia’s development pipeline comprises 28 projects and 380,633 square metres in active development with a current value of A$6.6 billion. The country unit had assets under management of A$12.7 billion and 3.8 million square metres of gross floor area at the end of June.
Last month, ESR announced the launch of its third core-plus logistics fund focused on the Australian market, once again with financial backing from GIC. ESR Australia Logistics Partnership III has received an equity commitment of A$600 million ($410 million), equalling the fundraising haul achieved by each of EALP I and EALP II.
Despite rising interest rates and a slowing global economy, ESR has kept up a steady fundraising pace for its Asia Pacific strategies. In recent months, the group closed on $250 million for its Pan Asia Core+ Venture, a co-branded vehicle with Logos, while M&G Real Estate agreed to deploy up to $350 million for a Japan logistics development partnership with ESR.