Jiangsu Friend Phase III is ESR C-REIT’s largest asset by floor area (Image: ESR)
More than two years after unveiling plans for a mainland-listed China logistics REIT, ESR announced the successful Shanghai IPO of the three-asset trust on Friday with the group having raised more than RMB 2.1 billion ($290 million) from the initial public offering.
The IPO proceeds are based on 800 million units priced at RMB 2.628 each, Hong Kong-listed ESR said in a release. The Warburg Pincus-backed industrial developer and fund manager retains a 41 percent stake in the trust, which attracted 12 cornerstone investors for its IPO.
Seeded with a trio of the group’s warehouse projects west of Shanghai, ESR’s first China REIT is positioned as a vehicle to allow domestic institutional and retail investors to participate in the growth of the country’s logistics sector, the company said. The trust’s units ended their first day of trading on the Shanghai Stock Exchange at RMB 3.03, up 15.3 percent.
“The strong support from our investors, partners, and regulators for ESR C-REIT’s listing is testament to the confidence and demand for high-quality logistics assets,” said ESR co-founder and co-CEO Jeffrey Shen. “Our new ESR C-REIT, along with our proven portfolio of REITs in the logistics and industrial sectors across APAC, creates viable capital market fundraising vehicles for investors and drives positive impact on the broader economy.”
Deep Project Pipeline
ESR C-REIT’s seed assets, three logistics facilities collectively dubbed Jiangsu Friend, are located a 45-minute drive west of Shanghai in the Jiangsu provincial city of Kunshan. The ESR-developed sheds were spun off from the group at a consideration of RMB 1.97 billion.
ESR executives celebrated the REIT’s successful Shanghai listing (Image: ESR)
Developed as a three-building logistics park, Jiangsu Friend Phases I-III comprise more than 426,000 square metres (4.6 million square feet) of total floor area. The portfolio boasts a five-year average occupancy rate of over 90 percent and multinational tenants in sectors such as logistics, e-commerce and fast-moving consumer goods, including luggage maker Samsonite and Havi, the supply chain manager for KFC and Pizza Hut in China.
“These three seed assets are among our finest in China, and we are confident that this portfolio will lay a solid foundation for scaling ESR China REIT’s growth and long-term value for investors,” said Chang Rui Hua, managing director of business management and investment for ESR Hong Kong, who oversees the C-REIT initiative.
As sponsor and project manager, ESR will provide the REIT with a future pipeline of projects for acquisition from a China portfolio of more than 170 assets valued at over $30.7 billion and spanning more than 14.9 million square metres of gross floor area.
“We look forward to deeper collaboration with onshore financial institutions and investors, as we continue to support the development of the supply chain and economy in China,” Chang said.
Enhanced Capital Recycling
ESR manages close to 180 assets across China, with nearly 70 percent of the group’s stabilised properties situated in key economic hubs of the Yangtze River Delta and Greater Bay Area, feeding on robust activity in renewable energy industries and cross-border e-commerce.
In its role as sponsor, ESR plans to provide the China REIT’s investors with a pipeline of projects for acquisition from its portfolio of assets under management and development workbook.
“As one of Asia’s largest REIT managers, we are committed to delivering sustainable growth and value to our investors, customers, and communities,” said ESR co-founder and co-CEO Stuart Gibson. “The listing of our ESR C-REIT strengthens the group’s new economy leadership in logistics real estate, data centres, and infrastructure and renewables, while enhancing our channels for accelerated capital recycling.”
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