This article is from the Australian Property Journal archive
EXCLUSIVE: LOGISTICS platform ESR is committed to the Australian market and looking to ramp up its investments in new economy sectors while capitalising on its US$30 billion portfolio in China through recycling of non-core assets.
The company which is the target of a US$7.1 billion privatisation takeover by a consortium consisting of sovereign wealth fund, the Qatar Investment Authority, Starwood, Sixth Street, and SSW Partners, is pursuing an asset light strategy to free up capital.
People familiar with the current takeover strategy, who wished to remain anonymous, spoke to Australian Property Journal and said as a private entity, ESR will accelerate unlocking capital from its industrial and logistics assets in China and transition towards new economy.
ESR had already hit the start button on this strategy, with the spin off a portfolio of assets in China to an ESR-managed RMB income fund in September for RMB5.8 billion (approximately US$814.83 million).
The spin off comprises of a portfolio of nine high-quality logistics assets in Tier 1 and Tier 1.5 including Guangzhou, Hangzhou, Shanghai and Suzhou.
“We have identified ESR’s China assets as part of the simplifying strategy and there is tremendous value to unlock capital through non-core divestments.
Across Greater China, ESR has more than US$30.7 billion of assets under management with a gross floor area of approximately 14.9 million sqm across 34 assets, as well as one data centre in Hong Kong.
“The value we unlock will be reinvested in the new economy sectors,” they told Australian Property Journal.
ESR said has identified three key new economy sectors to channel its resources as well as reaffirm its commitment to Australia.
ESR has set its sights on scaling up investments in logistics, data centres and alternative real asset classes such as renewable energy.
Currently ESR is the owner of Australia’s largest robotics fulfilment facility, leased to Amazon in Melbourne’s north, as well as a $500 million estate in Sydney’s Eastern Creek, and the $4.2 billion Moorebank Logistics Park.
Globally companies are embracing automation to reduce labour costs and productivity. Demand for automated warehouses is expected to exceed $45 billion by 2026 and over 213 million sqm of new warehousing space is needed by 2035, according to Euromonitor for global e-commerce growth.
In Australia, Amazon is not the only company investing in robotics, supermarkets Woolworths and Coles are also developing automated warehouses
In Australia, ESR’s wish list is to scale up its warehouse automation and robotics logistics platform.
“Robotics and automation logistics is growing in Australia, and we see potential in this sector particularly combined with the adoption of AI,”
“We remain fully committed in Australia.
“Australia is a key part of the global ESR portfolio,” they said.
In Australia ESR has $32.6 billion of AUM with a development pipeline of 5.1 million sqm valued at $19.6 billion.
It currently undertaking the development of the Craigieburn Logistics Estate, Troups Road Logistics Estate, Broadmeadows Logistics Estate in Victoria; Eastern Creek Logistics Estate, Erskine Park Logistics Estate, Horsley Logistics Park, Huntingwood Logistics Estate and Mascot Logistics Estate in New South Wales.
