Hong Kong-based ESR Cayman Limited announced that it has partnered with Dutch pension fund manager APG Asset Management and RECO Investor, an indirectly-owned subsidiary of Singapore’s GIC, to launch a new logistics development platform in China.
The ESR China Development Platform (ECDP) will have an initial equity commitment of $1 billion and invest in warehousing or warehousing and industrial mixed-use properties in China that will be sourced, developed, and managed by the ESR Cayman group of companies.
ESR Investor, a subsidiary of ESR Cayman, agreed to contribute up to $200 million, APG Investor committed $400 million, while RECO Investor agreed to chip in up to $400 million in the platform that has a potential investment capacity of over $4 billion.
APG Investor is the depositary of APG Strategic Real Estate Pool, which is owned by some Dutch pension funds. RECO Investor, on the other hand, is an investment holding company and indirectly wholly-owned by GIC (Realty) Private Limited, which is the investment holding company for GIC Pte Ltd’s real estate investments.
Under the terms of the agreement, should APG Investor and RECO Investors exercise their option to increase their capital commitment in the new platform to double the initial commitment, ESR will also raise its contribution to $400 million.
ECDP consists of three offshore joint ventures, in each of which ESR Investor will hold 20%, which will hold the relevant projects where the new platform invests.
Each offshore JV has an initial term of six years, which may be extended for further terms of one year by unanimous approval of all the shareholders of the offshore joint venture. The partners will provide investment management and asset management services to the JVs.
“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,” ESR co-founders and co-CEOs Jeffrey Shen and Stuart Gibson said in a statement.
The launch of ECDP comes as the global acceleration of e-commerce continues to drive growth in China’s logistics market.
According to the Global E-Commerce Outlook report by CBRE reports, global e-commerce sales are expected to grow $1.5 trillion by 2025 to reach $3.9 trillion, which will require an additional 138 million square meters of logistics space.
Last week, ESR agreed to acquire real estate fund manager ARA Asset Management for $5.2 billion in a deal that will create Asia Pacific’s largest real asset fund manager.
The companies said the assets under management of the combined entity will be $129 billion, with more than $50 billion to focus on so-called New Economy real estate such as data centres.