Newly listed ESR has acquired a development site in eastern Australia for A$142.5 million ($99 million), valuing its development pipeline in Australia at A$1.8 billion, according to a company announcement.
The Warburg Pincus-backed logistics specialist has zeroed in on the western Sydney industrial market for its most recent purchase, picking up 20.8 hectares (208,000 square metres) for a distribution park with 110,000 square metres of gross floor area.
The acquisition in Horsley Park comes just four days after shares in the company began trading on the Hong Kong stock exchange following an initial public offering that raised $1.6 billion.
“Since establishing our business in Australia last year, we’ve been focused on building a strong foundation on which we can grow in this market,” said ESR Australia’s chief executive officer, Phil Pearce.
With just sixteen months having passed since the company formally established a presence down under through its A$102.5 million buyout of real estate heavyweight Charter Hall’s Commercial & Property Pty Ltd (CIP), ESR now manages industrial and business park real estate assets in Australia worth $1.3 billion.
Targeting Eastern Australia
On its newly acquired site 42 kilometres from Sydney’s central business district at 327-335 Burley Road ESR is intending to build between four and six warehouses.
The proposed distribution centre – to be called ESR Horsley Logistics Park – will be just off the M4 and M7 Sydney-bound motorways, as well as being 23 kilometres from the Western Sydney Airport, the first phase of which is due for completion in 2026.
The company highlighted government investment in major motorway improvement schemes, the extension of the Sydney metro and the Moorebank Intermodal freight terminal development as factors contributing to the site’s value.
ESR told Mingtiandi that the company was not in a position to disclose timeline details for the proposed development at this stage.
Building Up a Development Pipeline
In addition to the Horsley Park acquisition, ESR expects to further boost its project pipeline in Australia after having exchanged contracts with sellers of five further sites near some of the continent’s largest cities. Should the company close on these additional five deals, it would add 48 hectares to ESR’s land bank in major industrial precincts of eastern Australia, according to the company’s announcement.
Included in this upcoming batch are two further Sydney sites – a 21.5 hectare plot in western Sydney’s Kemps Creek area which it plans to develop as an industrial park, and an 8.7 hectare site earmarked for a distribution centre in Leppington.
ESR has also exchanged contracts on a 6.5 hectare site located 25 kilometres southeast of Melbourne’s city centre which is said to be ideally suited for last-mile logistics projects.
The final two sites are in the Southeast Queensland growth corridor around Brisbane – including a five hectare site in Berrinba and a 6.2 hectare site in Willawong.
“With the addition of these recent land acquisitions to our existing land bank, we are well-positioned to deliver on our strategic priority of developing premium logistics properties in high-demand low-supply locations for our customers,” said Pearce.
Selling Off Non-core Assets
At the same time that it bulks up its industrial pipeline, ESR has also been selling off non-core assets in Australia after completing its A$723.4 million buyout of local investment firm PropertyLink just over one year ago.
Just last month, Ascendas Funds Management, a unit of Singapore’s CapitaLand Group, said that it would be paying A$110.9 million ($75 million) to purchase an office development in a southeastern suburb of Melbourne from a joint venture between Frasers Property Australia and the Australian unit of logistics group ESR.
The logistics specialist also sold a warehouse complex in Melbourne’s southeast last month to a private developer for A$19.75 million, and is seeking a buyer for a $50 million office building in Sydney’s Liverpool area.