ESR Bolsters Logistics Arm With $350m Mandate


Private equity-backed logistics platform ESR has moved to assert itself within one of the hottest real estate sectors in the country, bolstering its local arm by unveiling a new mandate to be known as ESR Australia Logistics Trust.

Its latest play, alongside the investment management arm of state-owned China Merchants Group, was formed with an initial seed-round of $175 million, which is expected to grow to $350 million within the next 12 months.

The fund was seeded by the sell-down of 11 of ESR’s wholly-owned assets with a value of $175 million.

ESR Australia, led by chief executive Phil Pearce, has been quickly putting together a string of deals in recent months to acquire industrial and business park real estate assets totalling $1.3 billion, with a land bank that has the potential to deliver future developments worth almost $2 billion.

▲ A potential development at Horsley Park, to be known as ESR Horsley Logistics Park.
▲ A potential development at Horsley Park, to be known as ESR Horsley Logistics Park.

The company's Australian arm established its presence down under two years ago through its $102.5 million buy-out of real estate heavyweight Charter Hall’s Commercial and Property Pty Ltd.

ESR is now looking to fast-track its growth as e-commerce sales in the country, which hit ten percent of total retail sales last year, are expected skyrocket by 2025.

“The establishment of this mandate is the first step in a strategy of releasing capital from our balance sheet to fund and accelerate our future developments,” Pearce said.

“ESR has been on an impressive growth trajectory in the 12 months since entering the Australian market.

“We have a robust development pipeline here in Australia, with a number of other opportunities we are pursuing.

It has been a very busy period for ESR since it entered the local market two years ago.

This year, ESR took over ASX-listed fund manager Propertylink for $723 million and it retains a stake in another listed fund manager, Centuria Capital.

ESR floated on the Hong Kong stock exchange this month, marking a rapid rise, after forming in 2016 through the merger of Japan-centric Redwood Group and China-focused e-Shang.

In Australia, it also announced a number of land acquisitions that bolstered the Australian development pipeline to about $1.8 billion in addition to the sale of non-core assets to continue to build its land bank.

The newly-floated industrial property platform, a pan-Asia logistics real estate platform, remains one of the largest in the region, with assets under management of more than $22 billion.

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