ESR raises $1b Korea logistics fund
Pan-Asian logistics investor ESR has raised $1 billion for its second Korea fund with support from APG Asset Management and Canada Pension Plan Investment Board (CPPIB).
APG, CPPIB, and ESR have made initial commitments of $350 million, $450 million and $200 million, respectively, although each partner retains an additional allocation option that could bring investment capacity to $2 billion. APG, CPPIB, and ESR will hold stakes of 35%, 45%, and 20%.
ESR-KS II will invest in and develop a best-in-class industrial and logistics portfolio in Korea, being initially seeded with a development project in Incheon, an infrastructure and transportation hub adjacent to Seoul. This site is planned to host a modern 154,000-square-meter (sqm) multi-tenant last-mile distribution center worth KRW240 billion ($198 million).
“E-commerce breakthroughs and a shortage of modern warehousing space are fuelling the continued growth of the logistics sector in the country,” Thomas Nam, CEO of ESR’s Korean platform SR-Kendall Square, said in a statement. “The strategic location in a market with constrained supply makes the initial Incheon City seed asset a prime opportunity.”
ESR-KS II marks APG’s fourth development collaboration, and CPPIB’s third joint venture with ESR. It is a successor vehicle to ESR-KS I, a $1 billion joint venture between the three parties that was later upsized to $1.15 billion. ESR-KS I has backed the development of 17 projects in Korea totaling 2.2 million square meters of floor area.
ESR was formed in 2016 through the merger of Singapore-based warehousing company Redwood Group Asia and e-Shang, Chinese counterpart founded by two local entrepreneurs in conjunction with Warburg Pincus. It claims to have $22.1 billion in assets under management, including directly-held properties and managed funds. Last year, the company raised HK$12.6 billion ($1.6 billion) in a Hong Kong IPO.
ESR-Kendall Square claims to be Korea’s largest owner of logistics properties with the largest development pipeline in the Seoul metro area. As of year-end 2019, the platform had $4.6 billion in assets under management, 2.9 million sqm of existing projects, and a development pipeline covering 3.2 million sqm. It focuses on state-of-the-art facilities.
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