ESR Milestone Partnership (EMP), an investment vehicle between Asia Pacific focused logistics real estate platform ESR Cayman Ltd. and Singapore’s GIC, has agreed to acquire the Milestone portfolio from Blackstone for A$3.8 billion ($2.9 billion).
This deal is Australia’s largest ever logistics and general property portfolio transaction, said ESR in a statement.
The deal represents the most significant logistics portfolio transaction in Australia and encompasses 45 highquality, income-producing assets across Australia’s major capital cities.
With a land area of 3.6 million sqm and GLA of 1.4 million sqm the site cover is a modest 38% and provides significant scope for further development.
ESR Australia will acquire Milestone Operations Limited, the manager of the portfolio.
The transaction will see ESR emerge as the third-largest logistics landlord in Australia with AUM increasing to A$7.9 billion.
ESR Australia partnered with GIC for the acquisition under a newly formed investment vehicle, EMP, which will see ESR contribute 20% of the equity.
The portfolio boasts a very high quality customer base consisting of national, multi-national, ASX listed or government clients such as Woolworths, Lineage Logistics, Toll (Japan Post), Daimler Benz, Australia Post, Mazda and WesTrac. The consideration attributed to the Portfolio is expected to provide an initial yield of 4.5% with a 6.9-year Weighted Average Lease Expiry.
ESR Australia CEO, Phil Pearce, described the acquisition as transformative providing ESR’s Australia business with immediate scale.
“The opportunity to secure such a large portfolio with extremely well-located assets across Adelaide, Brisbane, Melbourne, Perth and Sydney, strategically positions EMP to benefit from the continued growth in demand for warehouse space, particularly as the robust demand for logistics real estate is expected to remain strong due to sustained growth in e-commerce.”
“The portfolio is land rich, with low site coverage of only 38%, providing plenty of opportunity for ESR to redevelop these assets over time,” said Pearce.
Jeffrey Shen and Stuart Gibson, ESR Co-founders and Group Co-CEOs, remarked, “We are extremely pleased to deepen our partnership with GIC with this momentous transaction. The acquisition of the Milestone portfolio is a significant leap forward for ESR. This tremendous expansion not only adds immediate scale to our presence in Australia and the region, but also extends our footprint and reaffirms our commitment to one of our highest conviction markets in Asia Pacific.”
“Under Phil’s leadership, we have built a great platform and a top-notch team in Australia. This has been a key factor in ESR’s ability to establish itself as a major mover in this critical market.”