The acquisition, subject to merger clearance approvals, was made by Singapore’s sovereign wealth fund GIC and logistics real estate firm ESR Cayman’s Australian arm which bought the assets from global property owner Blackstone’s Australian Milestone Portfolio.
GIC and ESR partnered in the deal by forming a new business, EMP.
The assets include warehouses and other logistics facilities used by customers including national, multi-national, ASX-listed or government clients such as Mazda, Daimler (Mercedes-Benz), Woolworths, Lineage Logistics, Toll (Japan Post), Australia Post and WesTrac.
The assets cover a land area of 3.6 million square metres of which 38 per cent is under cover which allows further development in the future.
ESR Australia CEO Phil Pearce said the acquisition was “transformative” and would make ESR the third-largest owner of logistics real estate in Australia with $7.9 billion of assets under management.
“The opportunity to secure such a large portfolio with extremely well-located assets across Adelaide, Brisbane, Melbourne, Perth and Sydney, strategically positions EMP to benefit from the continued growth in demand for warehouse space, particularly as the robust demand for logistics real estate is expected to remain strong due to sustained growth in e- commerce sales,” he said.
“The portfolio is land rich, with low site coverage of only 38 per cent, providing plenty of scope for ESR Australia to redevelop these assets over time.”
ESR co-founders and co-CEOs Jeffrey Shen and Stuart Gibson called it “a momentous transaction.”
“The acquisition of the Milestone portfolio is a significant leap forward for ESR,” they said in a statement.
“This tremendous expansion not only adds immediate scale to our presence in Australia and the region, but also extends our footprint and reaffirms our commitment to one of our highest conviction markets in Asia Pacific.”
“Under Phil’s leadership, we have built a great platform and a top-notch team in Australia. This has been a key factor in ESR’s ability to establish itself as a major mover in this critical market.”
The sale process started in January 2021 and was highly competitive with more than 10 first-round bids received. This was subsequently reduced to five parties.
Hong Kong-listed ESR said it has formed EMP, an investment vehicle jointly owned with GIC, to bankroll this transaction. ESR will contribute 20 per cent equity in this investment vehicle, while the rest will come from GIC.
ESR Group is the largest Asia-Pacific logistics real estate group by gross floor area (GFA), by value of the assets owned directly and by the funds and investment vehicles it manages. It has more than $38.4 billion in assets under management across 20.1 million square metres of real estate and land.
ESR operates in China, Japan, Singapore, South Korea, India and Australia and has been listed on the Hong Kong stock exchange’s main board since 2019.
By Neil Dowling