This article is from the Australian Property Journal archive
PAN-Asian logistics giant ESR has raised $540 million for the anchor close of its new $1 billion develop-to-core ESR Australia Development Partnership II (EADP II) logistics fund, in partnership with Singaporean sovereign wealth fund GIC.
A second close is targeted in the first half of 2023.
EADP II will focus on creating industrial assets underpinned by environmental, social and governance principles.
GIC has committed $490 million as the cornerstone investor. The pair have teamed up multiple times now in putting capital towards Australia’s industrial and logistics sector, as recently as last month with GIC committing another $600 million to the third ESR Australian Logistics Partnership, as well as the $1 billion first installment of EADP, and last year’s record-breaking $3.8 billion acquisition of the Milestone logistics portfolio.
EADP was established in June of 2020 with $1 billion of equity commitments from partners including GIC, ESR’s Pan Asia Fund, and sovereign wealth and life insurance funds. All of EADP’s equity has been allocated across eight projects in Sydney, Brisbane and Melbourne, with an expected end value of $2.6 billion. Projects include ESR Horsley Logistics Park in Sydney, Acacia Ridge Business Park in Brisbane and ESR Green Link Estate in Cranbourne, Melbourne.
“Following the successful deployment of EADP capital, EADP II will look to extend the develop-to-core strategy providing investors the opportunity to take advantage of ESR Australia’s proven development capabilities and access a modern portfolio of high-quality strategically located logistics assets with strong ESG credentials as their foundation,” said ESR Australia CEO, Phil Pearce said.
“Despite the current interest rate environment, logistics property remains an attractive investment proposition due to the strong demand and shortage of available stock, which has seen strong rental growth.”
Pearce said investors are increasingly incorporating ESG targets in their investment considerations.
“EADP II will leverage its ESG-centric approach through energy consumption reduction, human-centric design application and a dedicated solar strategy as integral to building for a sustainable future”.
ESR is has already committed to this as the new direction of its future estates. Works began at the $700 million, 79-hectare ESR Green Link Estate that has attracted the signature of logistics provider CEVA.
Last year ESR upsized its first sustainability-linked loan to US$1 billion and ESR Australia expedited its ESG program.
A new roadmap from the Green Building Council of Australia launched earlier this year outlining a path to decarbonised precincts across the country, targeting a net zero goal for 2030 for new precincts and 2050 for existing precincts. RICS research shows more than half of property players believe that green and sustainable buildings achieve a rent and a price premium.
ESR entered the Australian market recently but its local arm has already built up a $6.6 billion development pipeline encompassing 28 projects and 380,633 sqm in active development. It has assets under management of $12.7 billion and 3.8 million sqm of gross floor area.
“The launch of EADP II builds on our excellent fund management track record in Australia, demonstrating our ability to offer capital partners strong investment options with high-quality returns,” said Stuart Gibson and Jeffrey Shen, ESR co-founders and co-CEOs.
“It is also a testament to our competitive edge as APAC’s largest real asset manager with an integrated fund management platform that enables investors to access attractive secular growth opportunities propelled by e-commerce and digital transformation.”
