Warehouse giant ESR has agreed to sell a portfolio of nine industrial assets in China to a joint venture of the Hong Kong-listed group and Singaporean sovereign wealth fund GIC for $730 million.
The portfolio is 98% occupied and consists of completed assets with a total gross floor area of more than 873,000 square meters (9.4 million square feet) in regions such as the Yangtze River Delta, the Greater Bay Area and Beijing-Tianjin-Hebei, ESR said. Monday in a version. The transaction represents ESR’s largest-ever sale of self-developed balance sheet assets.
The joint venture is 90% owned by GIC and 10% by ESR, according to disclosed financial details in a separate folder with the Hong Kong Stock Exchange. The just-announced agreement, which remains subject to regulatory approval, will bring the overall core portfolio managed by ESR with GIC to more than 1.4 million square meters.
“We are very pleased to further expand our relationship with one of our long-standing financial partners, with whom ESR has built a strong relationship and track record across strategies and markets,” said the co-founder and co-CEO of ESR, Jeffrey Shen. “Despite some short-term macro and geopolitical headwinds, this transaction is further evidence that institutional investors are increasingly attracted to the attractive long-term income potential of well-located, high-quality China logistics portfolios developed by ESR.”
ESR said the latest disposal aligns with the group’s capital recycling strategy of transferring balance sheet assets into investment vehicles it manages and in which it co-invests.
In 2021, ESR sold over $800 million of its balance sheet, translating to over $500 million of net cash that was recycled back to the group.
In May this year, ESR sold its 18.16% stake in Logistic property in China for gross proceeds of $350 million to fuel future growth opportunities, the group said. JD Logistics, a unit of JD.com in China – a key investor in ESR – acquired CNLP last year in a $2.1 billion deal.
“With the completion of this sale, ESR Group is well positioned to deliver another record year of capital recycling as we seek to capitalize on increasingly attractive pipeline opportunities in APAC and capitalize on the strength of our integrated platform, balance sheet, financial partners and customers to deliver long-term sustainable growth,” Shen said.
ESR’s development pipeline in China stands at 6.9 million square meters after the group announced a record letting in the country of more than 2 million square meters in 2021. Third-largest investment manager listed real estate globally, ESR has total assets under management of $140.2 billion. .
Sheds still in demand
China’s logistics sector has remained hot this year as the mainland’s COVID-19 outbreak and ensuing restrictions have frozen other asset classes.
SF REIT last month agreed to acquire a warehouse complex in central China for 540 million RMB ($81.2 million), as the Hong Kong-listed logistics trust seeks to expand its portfolio of three assets and expand its geographical footprint.
Mingtiandi reported in late May that the real estate investment arm of banking titan Morgan Stanley had purchased a portfolio of four logistics assets in cities surrounding Shanghai from Singapore-based SC Capital Partners for an undisclosed sum.
Earlier in May, New World Development revealed plans to buy six mainland logistics properties from a fund managed by Australia’s Goodman for RMB2.29 billion, while retail-heavy Link REIT , agreed to buy a portfolio of three warehouses in the Yangtze River Delta for 947 million RMB. as the second logistics acquisition for Asia-Pacific’s largest listed trust.