China’s JD Property has teamed up with a start-up real estate investment firm backed by Hillhouse Capital with the partners having set up an operating platform in Singapore after acquiring five logistic properties in the city-state, according to an announcement by the two companies and sources who spoke with Mingtiandi.
The unit of online commerce giant JD.com is working with EZA Hill, a Southeast Asia-focused industrial developer and fund manager led by former PGIM and Viva Industrial Trust executive Frank Ng, according to a joint statement by the partners. EZA Hill was co-founded by Ng and is backed by Hillhouse according to multiple sources, with the private equity firm led by mainland fund manager Zhang Lei having closed on $2 billion for its first real estate fund in August of last year.
Together, JD Property and EZA Hill on 16 October completed their acquisition from ESR-Logos REIT of the final three assets in a five-property portfolio of Singapore industrial properties at a total cost of S$350 million ($255 million), including land premiums paid to local regulators, the partners said in their announcement that same day.
“This is an important milestone towards building our business in Asia,” said Richard Law, head of Asia at JD Property. “Logistics is one of our key investment themes supported by favorable market fundamentals.”
After ESR-Logos REIT had announced the sale of its 1.9 million square foot (174,000 square metre) portfolio in June, Mingtiandi had identified Hillhouse as a buyer days later, with last week’s announcement confirming JD Property’s investment in the new venture.
“Over the past few years, we have been actively acquiring and developing logistics assets within the region,” said Kevin Shao, head of Southeast Asia at JD Property. He added that, “The strategic locations of these assets, coupled with the rising logistics demand, will provide stable and resilient returns to our stakeholders.”
Hillhouse Capital, together with Warburg Pincus, led a $700 million investment in JD Property in 2021.
As part of the investment, the partners have established Primus Partners Management Asia, which will manage the portfolio. Primus will be rolling out asset enhancement initiatives on the properties, which are spread across the western and eastern regions of Singapore, to better align them with tenant requirements.
The acquisition, Singapore’s largest industrial deal this year, was completed in two batches on 23 August and 16 October and gave the partners their first properties in Southeast Asia’s wealthiest nation.
The partners acquired the portfolio from ESR-Logos REIT for S$337 million, or a 5.1 percent discount from the portfolio’s book value of S$330.4 million, with the deals closing in two batches on 23 August and 16 October.
The purchase price was equivalent to about S$1,804 per square metre of the portfolio’s gross floor area of 173,783 square metres (1.87 million square feet), before paying land premiums to Singapore’s Jurong Town Corporation (JTC).
With five Singapore assets in its portfolio, EZA Hill is aiming for a Southeast Asia-wide presence, while JD Property is also expanding in the region.
“Over the long term, we believe EZA Hill will be well-positioned to capture the emerging growth taking place in the industrials and logistics markets in Southeast Asia, driven by shifts in manufacturing and industrial activity, and coupled with an undersupply of high-quality, well- located assets,” Ng said in the statement.
The company, “builds platforms across verticals that span logistics, e-commerce, and cold chain warehousing,” according to its website, with Ng having begun work at EZA Hill in October of last year after leaving PGIM Real Estate, according to his LinkedIn profile. EZA Hill says its portfolio spans both traditional and new economy segments across the Southeast Asian region.
During his time at PGIM Real Estate, Ng led deals including a $100-million Singapore warehouse development joint venture with ESR. He had served as chief operating officer at Viva Industrial Trust until that Singapore-listed REIT was acquired by ESR REIT (now ESR-Logos REIT) in 2018. At the time of that buyout, current Hillhouse Capital partner Joseph Gagnon served as a director of ESR, the sponsor of ESR REIT.
With Shao having been based in Singapore with JD since May of 2021, the company has plans for further expansion around the region, according to its senior management.
“We will continue to look for value-creation investment opportunities to scale our portfolio in the Asia-Pacific region,” Law said in the statement. JD.com filed for a Hong Kong IPO for JD Property in March of this year, however, that application lapsed without being renewed.