ESR Acquires Osaka Site for $500M Japan Logistics Project

Logistics real estate developer and operator e-Shang Redwood (ESR) has just acquired a 194,000-square meter site near Osaka for the development of one of the largest logistics parks in Japan with an estimated investment of over US$500 million.

The new investment follows just over one month after the Asian warehouse specialist received an additional $100 million in funding for its Japan projects, with the company expected to head for a multi-billion dollar IPO later this year.

A Warehouse So Big It Gets Its Own Spa

The ESR Amagasaki Distribution Centre in Amagasaki City, Hyogo prefecture, will have a gross floor area of 390,000 square meters, making it one of the largest logistics facilities built in Japan. According to the company, the construction of the six-storey, double-ramped building is scheduled to commence in January 2018 with completion expected in early 2020.

“This large format, vertical park development marks another milestone in the evolution in the size, shape and user interface of modern logistics facilities in the area,” said Stuart Gibson, co-CEO, co-founder and head of ESR’s Japan operations. He added that, “In addition to the functionality of the facility, we have incorporated many of our trademark features such as child day care center, health club, relaxation lounge (Barn Klubb concept), as well as multiple retail outlets for our customers,” Gibson added.

$1.5 Billion in Japan Projects So Far in 2017

ESR has recently been active in expanding its operations in Japan over the past year. In February, the group received fresh funding from the State Oil Fund of Azerbaijan (SOFAZ), which committed over US$100 million to the company’s Japan logistics projects.

“Rapid growth in the operations of third-party logistics companies and the e-commerce sector, combined with Japan’s stable overall economy and the shortage of modern warehouse space (less than 10 percent of the total market supply), has made the logistics sector here an attractive option for developers and investors,” ESR said in an earlier statement.

The Azerbaijani investment came just one month after ESR announced a deal to develop a $1 billion logistics facility in Ichikawa City, near Tokyo. That 229,000 square metre project represents one of the largest single asset logistics developments in Greater Tokyo to date, according to statements by ESR.

More Funding Means More Warehouses

ESR’s new megaprojects have been supported by an influx of funding as the company prepares for a public stock listing later this year.

During January, ESR secured a US$300 million pre-IPO preferred equity investment from a consortium of Chinese investors including GF Investments (HK), Huarong International, Huarong Rongde, SPDB International, China Everbright Limited, Everbright Securities and CMBC International.

That funding round was preceded in July last year by a $300 million investment by Ping An Real Estate. The property investment arm of China’s Ping An Insurance committed to entering four co-investment projects with ESR in Japan, with an option to participate in more deals over the following 12 to 18 months.

Co-founded by Warburg Pincus and backed by some of the world’s preeminent investors including APG, CPPIB, Goldman Sachs, Morgan Stanley, PGGM and Ping An, ESR’s platform represents one of the largest in the Asia-Pacific region managing over 7 million square metres of projects owned and under development across China, Japan, Singapore and South Korea.