
ESR Kendall Square Goyang Logistics Park in Gyeonggi province
Shares began trading in Korea’s first dedicated logistics REIT on 23 December as ESR’s Korean unit finalised an initial public offering that helped the warehouse specialist and fund manager raise $650 million.
Following the Wednesday trading debut at KRW 5,000 ($4.54) each, units in ESR Kendall Square REIT, which is backed by nearly a dozen stabilised logistics facilities developed by Seoul-based ESR Kendall Square, closed the day on Monday at KRW 5,120 each have climbed 3.64 percent since the start of trading last week.
“The successful listing of ESR Kendall Square REIT is a testament to the strong portfolios of quality assets, investors and tenants that our team has built through the years,” said ESR Kendall Square chief executive Thomas Nam. “With the robust growth of e-commerce driven by a confluence of factors including the pandemic, public investors have shown a growing appetite for quality core assets that can generate stable, long-term returns.”
Having achieved this milestone in Korea, ESR Kendall Square’s Hong Kong-based parent firm is now looking ahead to growing its warehouse business in Southeast Asia, where it already managed some $26.5 billion in assets as of 30 June, as well as expanding into data centres in the coming year.
Korea’s First Logistics REIT
While Korea’s markets are known for being dominated by domestic players, in the institutional round of the offering some two-thirds of ESR Kendall Square REIT’s equity was taken up by global institutions, with the company anticipating broad support for the listed trust.

ESR Kendall Square CEO Thomas Nam
“We expect to see more global investors coming into Korean REITs,” Nam told Mingtiandi.
With the REIT’s focus on one of the property market’s hottest sectors, he foresees growing support. “We are the first logistics-focused REIT in Korea,” the CEO said. “We don’t expect logistics REITs of our size and quality coming into the market soon.”
Among the institutions buying into the REIT pre-IPO were Canada’s CPPIB, Seoul-based Military Mutual Aid Association, the Industrial Bank of Korea and the Korean Reinsurance Company.
“The REIT is a game changer for ESR’s Korean platform,” the group’s chairman, Jeffrey Perlman, told Mingtiandi, as he pointed to the benefits of broadening ESR Kendall Square’s interface with Korea’s capital markets. “As we have seen with REITs generally, scale matters. The larger you can become, the more it will reduce your cost of capital.”
Now that the IPO is complete, the listed trust will be using the proceeds to purchase 11 stabilised logistics assets in the Greater Seoul and Busan areas, both through direct acquisitions and through buying out private funds managed by ESR Kendall Square.
The entire portfolio spans 684,095 square metres (7.4 million square feet). Ten of the properties have already been acquired, with an eleventh to be purchased by 1 June 2021.
With ESR Kendall Square currently managing some $7 billion in assets in Korea, Nam said the trust expects to add more properties from its sponsor’s portfolio by the end of 2021, as well as potentially acquiring some third-party assets.
“We just completed 440,000 square metres of new projects this year,” Nam said. “We have fully leased up the new projects, and even many of the projects for next year are now precommitted.”
COVID-19 Accelerates Demand
After achieving Hong Kong’s third-largest IPO of 2019, ESR began exploring the possibility of a Korean REIT offering not long after that HK$12.6 billion ($1.6 billion) debut, according to company officials. But the developer and fund manager points to the COVID-19 pandemic, and an accompanying surge in e-commerce activity, as having focused investor attention on the sector.
“At the initial outbreak of the coronavirus, people were stunned, and in Korea the e-commerce delivery system worked so well that people started ordering online,” Nam said, adding that the company, which counts Korean e-commerce giant Coupang among its tenants, saw leasing demand rise during the pandemic.
“In the REIT portfolio, about 70 percent of the tenants are e-commerce or 3PL (third-party logistics providers), and they are the ones who have been active this year, and I think the trend will continue going forward,” Nam said.

ESR chairman Jeffrey Perlman is looking forward to some data centre deals in 2021
Perlman saw the pandemic as enhancing demand, but he noted that Korea had embraced e-commerce well before the crisis, as the company has witnessed since it first established ESR Kendall Square in 2014.
“I think that, given the resiliency of the asset class, we had a little bit of wind at our back this year, but there would have been strong demand for it regardless,” Perlman said. “Demand for logistics REITs has been growing, especially in e-commerce savvy countries like Korea, as public market investors look for listed, income-producing real estate platforms that are ready for the New Economy.”
While e-commerce has been popular in South Korea for some time, Perlman, who also serves as head of Asia Pacific real estate and head of Southeast Asia at ESR co-founder Warburg Pincus, sees the COVID-19 crisis as having accelerated adoption of online shopping.
“Koreans have been on the front foot for e-commerce for a while now, and the country has almost three times the penetration of where Japan is now,” Perlman said. “Now the pandemic has brought that penetration along by two or three years.”
Data Centres, Indonesia on the Way
While holding out the potential for future development of a Japanese REIT, in addition to its Singapore-listed ESR REIT, ESR’s chairman put the continued expansion of the company’s business in its core markets at the top of the logistics firm’s 2021 plans, but he still pointed to opportunities for new growth.
Without providing a timeline, Perlman said the company is already working on more than one data centre project, and it expects to be making formal announcements regarding its initiatives in the sector during the new year.
“Data centres are becoming a very compelling asset class, one that’s underpinned by secular trends and one that ESR is very well positioned to participate in,” Perlman said.
He pointed out that the company’s expertise in developing logistics projects also positions it to compete in the market for building server facilities.
“One of the biggest challenges for most data centre operators is the ability to source land and to build, and that’s what we do very well,” Perlman said. “We’ve got significant business development efforts set up around Asia, and the ability to deliver local approvals, whether it’s power or development permits, this is what ESR does every day.”
He added that some of the company’s existing tenants are already active in the cloud sector.
In addition to the planned move into data centres, Perlman, who is based in Singapore, said ESR will continue to expand its operations in Southeast Asia.
“It’s a region of 650 million people, and continues to be a market as a whole that we want to get more exposure to,” he said. “That’s because our tenants are asking for it, as well as our capital partners are asking for that exposure.”
The company is expected to announce new projects in Indonesia during the coming year, and Perlman has previously mentioned potential plans for ESR to expand into Vietnam.
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