CPP Investments, ESR expand Korean logistics JV to US$1 billion

CPP Investments, ESR expand Korean logistics JV to US$1 billion
Image: Courtesy of ESR

Canada Pension Plan Investment Board (CPP Investments) and ESR Cayman Ltd. have expanded their Korean logistics real estate joint venture, Korea Income Joint Venture, to US$1 billion.

CPP Investments and ESR will collectively upsize their investment in the vehicle by a further US$500 million, with CPP Investments contributing the majority of the capital.

The new capital will effectively double the size of the venture to US$1 billion in total equity allocation.

The Korea Income JV was established in 2018 to focus on investments in income producing logistics assets located in major metropolitan areas of South Korea. The portfolio, which is managed by ESR Kendall Square, consisted of 12 institutional-grade modern logistics facilities with an aggregate GFA of 774,666 sqm. Six of the 12 assets were divested to ESR Kendall Square’s Korea Logistics REIT in December 2020.

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”Korea is already one of the most developed e-commerce markets in Asia and the pandemic has accelerated the growth in the past year, further fuelling the demand for quality logistics facilities. By expanding our successful joint venture with ESR, we are able to meet the fast-growing demand and strengthen our leadership position in the market, ultimately delivering long-term value for CPP contributors and beneficiaries,” said Jimmy Phua, Head of Asia Real Estate at CPP Investments.

”The upsize of the Korea Income JV is a reflection of the solid performance the vehicle has achieved in the past several years. The positive results demonstrate the strength of our investment strategy and asset management capability as well as the continued confidence of our long-standing capital partner, CPP Investments,” said Thomas Nam, CEO of ESR Kendall Square, ESR’s South Korean platform.

”The demand and long-term prospects of high quality logistics facilities continue to show stable growth, especially as e-commerce adoption and structural changes in supply chain management have been driven forward during the COVID-19 pandemic. With the increased capital commitment, we will be in an even better position to respond quickly and strategically to opportunities as they arise,” he added.