ESR raises US$1bn for new South Korean logistics JV

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Hong Kong-listed logistics developer and fund manager ESR has raised US$1bn in equity for a new joint venture to develop logistics properties in South Korea.

ESR has partnered with Dutch pension fund APG and Canada Pension Plan Investment Board (CPP Investments) for the ESR-KS II venture, which will have as much as US$2bn in investment firepower.

CPP Investments, APG, and ESR have made initial investments of US$450m, US$350m and US$200m, respectively.

The partners have options to increase their allocations that could bring the total equity investment capacity to as much as US$2bn over time.

The JV will invest in and develop a logistics and industrial warehouse portfolio spanning the Seoul and Busan metropolitan areas, the two markets with the largest populations and highest consumer spending in South Korea, the company announced.

“Asia’s consumer sector has been one of our key investment themes,” said Jimmy Phua, head of Asia real estate at CPP Investments.

“The continued growth of South Korea’s e-commerce market is driving the demand for quality logistics facilities. This new joint venture deepens our longstanding relationship
with ESR and APG. It will be key to our growth strategy in the logistics sector globally.”

The JV marks CPP Investments’ third venture, and APG’s fourth development partnership, with ESR.

The venture is the successor to a US$1bn JV that developed 17 projects totalling 2.2m sq.m. of gross floor area in South Korea.

“Following the success of our first joint venture with ESR and CPP Investments in Korean logistics, we are delighted to be able to repeat the partnership,” said Graeme Torre, head of real estate at APG Asset Management Asia.

“This will allow us to capture the next wave of growth and opportunity in a sector that even in these uncertain times, is demonstrating resilience.”

The deal is expected to close by July 2020.

ESR has launched numerous new funds and ventures over the past 12 months, including a new A$1bn (US$616.5bn) Australia-focused logistics partnership last month.

The logistics fund manager and developer entered into a US$500m joint venture with Singaporean sovereign wealth fund GIC to invest in logistics properties in China in January this year.

In May last year, ESR raised JPY 70bn (US$630m) in the closing of its ESR Japan Logistics Fund 3 to fund its development pipeline in Greater Tokyo, Osaka and Nagoya.