Hong Kong-listed warehouse developer and fund manager ESR announced on 30 June that it had acquired a 100 percent stake in three logistics properties in eastern China’s Jiangsu province.
The addition of the trio of projects to ESR’s China holdings stands to add 345,000 square metres of warehouse space to the Warburg Pincus-backed company’s mainland portfolio. Financial terms of the acquisitions were not disclosed.
The three projects, which include one stablised asset, an in-progress development and a redevelopment candidate, will join a China portfolio that stood at 6.9 million square metres of space as of 31 December 2019.
Adding 345,000 SQM of New Sheds
The first property is a fully-leased, stabilised asset with a gross floor area of over 160,000 square metres, according to the company. The second, which is set to yield 35,000 square metres of finished space, is being developed on a land parcel of over 60,000 square metres, and has already been fully pre-leased.
ESR says it plans to redevelop the third property — which occupies a land area of approximately 130,000 square metres — into a 150,000 square metre international standard distribution facility.
“The addition of these strategically located assets will further enhance ESR’s position in catering to the robust market demand for high-quality logistics facilities with its industry-leading platform,” the announcement said.
ESR has declined to disclose the specific locations of the three assets.
Positive About E-Commerce Demand Despite 2020 Challenges
Since achieving a HK$12.6 billion IPO last year, ESR has continued to grow a warehouse platform that already ranks among Asia Pacific’s largest.
Created through the 2016 merger of Shanghai-based e-Shang and the Japan-focused Redwood Group, the company now has more than 300 property assets covering over 17.2 million square metres gross floor area in operation and under development. 60 percent of ESR’s customers are e-commerce and third-party logistics companies.
As of December 31, 2019, ESR’s assets under management in mainland China exceeded $4.8 billion.
Despite a 4 percent reduction in retail sales wrought by the pandemic, China is still expected to overtake the US this year as the world’s largest overall retail market — with over $5.07 trillion (RMB 35.04 trillion) in sales, according to market research firm Emarketing.
“Even in the current global economic environment, logistics real estate has demonstrated considerable resilience,” said Jeffrey Shen, co-founder and co-CEO of ESR.
“We are confident that the growth of e-commerce and structural change in consumption patterns will continue to fuel the demand for high-quality logistics assets from both investors and tenants.”