Warburg Pincus-Backed ESR Resumes Procurement with China and India Warehouse Deals

Hot on the heels of completing the $5.2bn acquisition of Singapore-based ARA Asset Management in January, ESR Cayman continues to expand with the purchase of a portfolio of warehouses in the greater Shanghai area and building a logistics facility in India as it seeks to tap into booming demand from e-commerce businesses.

The transaction represents the largest-ever portfolio of logistics and industrial properties in and around China’s largest city, according to ESR. The company did not disclose financial details, but real estate website Mingtiandi said the assets were purchased from US firm DLJ Real Estate Capital Partners for more than $692m. Real estate consultant JLL was the advisor for the transaction.

ESR – which counts New York-based private equity firm Warburg Pincus, Chinese e-commerce giant JD.com, Singaporean tycoon John Lim and billionaire Chew Gek Khim’s Straits Trading among the major shareholders – was among the investors most active in logistics properties in 2021. The Hong Kong-based company has completed more than $10bn in deals, including the April purchase of a portfolio of warehouses across Australia from Blackstone for $2.8bn. Global investors poured a record $48bn into Asia-Pacific logistics investments last year, up from $32bn in 2020, JLL said in a report released last week.

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Last week, Hong Kong-listed ESR and its long-time financial partners completed the acquisition of a portfolio of 11 logistics and industrial properties in the Yangtze River Delta region that spans Shanghai and the cities neighboring Suzhou and Hangzhou, increasing exposure of so-called new economy assets such as warehouses that support e-commerce.

“This acquisition further strengthens ESR’s strong position in China as we continue to expand our network of strategically located prime new economy assets across the country,” said Jeffrey Shen, co-founder and co-CEO of ESR, in a statement Thursday. “It also demonstrates our ability to seize attractive business opportunities for our financial partners who wish to increase their exposure to new economy real estate where they remain significantly underweight.”

The Shanghai agreement follows ESR’s announcement on February 3 of the development of its first city distribution center in Delhi following the acquisition of an 8.2-acre (33,184 square meter) plot of land in the Indian capital. The Delhi logistics facility will have approximately 300,000 square feet (27,870 square meters) of space to support grocery e-commerce, healthcare delivery services and cloud kitchens when completed next year.

“In-city retail real estate is still at a nascent stage where the availability of institutional-grade facilities in key metros has been a major concern for our tenants,” ESR India CEO Abhijit Malkani said in a statement. communicated. “We wanted to solve this problem by being one of the first players through the acquisition of our first site in town in the capital.”

While ESR has made inroads into the Indian logistics real estate market in recent years, its $1.5 billion portfolio of assets in the country is dwarfed by the more than $13 billion in assets under management in China, one of the company’s key markets.

The acquisition of the Shanghai warehouses, with a gross floor area of ​​550,000 square meters, is a rare opportunity in the tight market, Shen said. “The portfolio has several projects with high potential for added value, which will be leveraged by ESR as our highly experienced team leverages their deep local knowledge and our strong client relationship ecosystem.”

“Investors are aggressively looking for scale when deploying capital in this asset class,” said Theodore Novak, executive director and head of institutional capital markets in greater China at JLL, via email. the allure of portfolio transactions to instantly enhance assets under management in one of the world’s largest logistics markets.

The Shanghai and Delhi transactions strengthen ESR’s position as the largest property manager in Asia-Pacific. The firm manages approximately $140 billion in assets in 28 countries around the world, including $59 billion in new economy assets in the region.

Source: The Bharat Express

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