ESR raises US$750m in initial closing for ESR Japan fund

ESR raises US$750m in initial closing for ESR Japan fund
ESR Amagasaki Distribution Centre, Osaka

ESR Cayman Limited Thursday announced the initial closing of ESR Japan Income Fund (JIF) endowed with US$750 million of equity commitments.

The newly-launched fund is set to acquire a US$2.1 billion initial portfolio with a target of US$10 billion GAV by 2026.

The c. 618,000 sqm seed portfolio of JIF consists of four state-of-the-art assets developed by ESR-managed development vehicles.

The portfolio is 99% occupied and the exit to JIF is consistent with the relevant investment and disposition strategies of the ESR development vehicles selling the assets.

The seed portfolio will include a stake in ESR’s largest asset to date, the award-winning 388,570 sqm ESR Amagasaki Distribution Centre in Osaka, which boasts a GAV in excess of US$1.0 billion and is now 98% leased to a diversified rent roll of 16 tenants including leading e-commerce companies since its completion in June 2020.

The other seed assets include ESR Toda Distribution Centre and ESR Kawasaki Yako Distribution Centre in Greater Tokyo, and ESR Nanko Distribution Centre 1 in Osaka.

”With access to ESR’s robust development pipeline, which includes over 1 million sqm of GFA currently under construction, and the ability to undertake sizable third-party acquisitions, JIF has a defined roadmap to grow to over US$10 billion over the next five years,” said ESR in a statement.

Stuart Gibson, Co-founder and Co-CEO of ESR, welcomed the first closing of JIF as a long-awaited building block in ESR’s core product offering.

He remarked: “The secular trends fuelling modern logistics real estate growth are still nascent. Logistics facilities are getting larger and larger to meet the increasingly complex needs of the tenants and we are now seeing US$1 billion warehousing values. The Japan Income Fund’s scalable structure combines diversification with capacity to meet this increasing capital intensity.”  

Expanding on Mr Gibson’s words, Pierre-Alexandre Humblot, ESR Managing Director, Fund Management & Capital, commented: “Institutional investors are becoming increasingly aware of the extremely compelling long-term income potential of well-located urban logistics portfolios. JIF was correspondingly structured to allow ownership in perpetuity and to incentivise sustainable income growth. The fact that JIF was vastly oversubscribed is a testament to the strategy.”

In August 2021, ESR announced the plan to acquire 100% of the share capital of ARA Asset Management Limited.

In mid October, the Group also announced the proposed merger of ESR-REIT and ARA LOGOS Logistics Trust – one of the value enhancing steps for the enlarged ESR Group as part of the proposed ARA acquisition.