ESR Cayman Limited (ESR) has entered into an agreement to launch its latest logistics development platform in China (ECDP) with Dutch pension fund asset manager APG Asset Management (APG) and another global institutional investor.
ECDP, with an initial equity commitment of US$1 billion, provides the potential investment capacity of up to US$4 billion over time.
ECDP focuses on a continuation of ESR’s strategy to develop and own modern, institutional-grade logistics facilities in major logistics hubs across China with a focus on Tier 1 and Tier 1.5 cities.
In July, ESR had announced a JPY75 billion (circa US$675 million) expansion of ESR Japan Logistics Fund III (RJLF3), a development joint venture established with APG and a global institutional investor.
“Capital partner support has been key to the growth of ESR’s new economy real estate platform. We are thrilled to extend ESR’s successful collaboration and close relationship with these two leading institutional investors, with whom ESR has already delivered strong results in China and across the Asia Pacific region,” said Jeffrey Shen and Stuart Gibson, Co-founders and Co-CEOs of ESR.
“The acceleration of e-commerce continues to drive growth in China’s logistics market. What’s more, structural shifts in supply chain management, and consumers’ shopping habits and lifestyle changes are reshaping the market. These trends are opening new development and investment opportunities to ESR and our capital partners as the demand for advanced, large-scale and well-located logistics assets becomes even greater,” he added.
ESR said global e-commerce sales are expected to grow US$1.5 trillion by 2025 to reach US$3.9 trillion, which will require an additional 138 million sqm logistics space.
In China, which boasts one of the world’s highest levels of e-commerce penetration, demand for prime logistics assets is set to continue a robust upward trajectory, according to the company.
“The China logistics sector continues to be a critical part of the China growth story. We believe that building new assets designed to meet environmental standards and ever-changing occupier demand is one of the better ways to create a resilient portfolio for long-term performance. To do this, it is essential to have development partners that offer first-class sourcing and execution capabilities, which is why we have embarked on our second China-focussed platform with ESR,” commented Graeme Torre, Head of Real Estate Asia Pacific for APG.
ESR’s integrated fund management platform has provided its capital partners with access to some of the world’s best secular growth opportunities propelled by the positive trends of e-commerce, urbanisation and domestic consumption in the region. In China, ESR manages a best-in-class logistics real estate portfolio of US$6.7 billion in AUM and 8.5 million sqm in GFA, as of 31 December 2020. ESR also holds the largest development pipeline in the country’s leading economic and logistics hubs – Greater Shanghai, Greater Beijing and Greater Guangzhou.
The transaction is subject to relevant regulatory approval.