ESR Raises $410M for 3rd Australia Core-Plus Fund With Backing From GIC

Industrial specialist ESR has launched the third in its series of core-plus logistics funds focused on the Australian market, with financial support once again provided by its longtime partner, Singapore sovereign fund GIC.

ESR Australia Logistics Partnership III has received an equity commitment of A$600 million ($410 million), equalling the fundraising haul achieved by each of EALP I and EALP II, Hong Kong-listed ESR said Friday in a release.

The two previous GIC-backed vehicles are now fully allocated to a combined portfolio of 682,016 square metres (over 7.3 million square feet) across Australia, with the 2021-vintage EALP II holding 17 assets representing an expected end value of A$1.3 billion.

“We are pleased to expand our long-term partnership with GIC on EALP III as it reflects our collective confidence in ESR’s ability to capitalise on the growing set of opportunities across APAC and especially in Australia,” said ESR co-founders and co-CEOs Stuart Gibson and Jeffrey Shen.

Streaking to the Finish

In August, ESR Australia closed out EALP II’s equity deployment with the acquisition of two incoming-producing portfolios of assets across Melbourne, Brisbane and Perth. The unit purchased the portfolios, comprising eight logistics properties, for a total of A$158.6 million, the Australian Business Review reported.

Just a month earlier, ESR had announced the A$106.5 million acquisition of five industrial properties in Greater Melbourne on behalf of EALP II.

In May of last year, ESR sold a 10 percent stake in the 2020-vintage EALP I to ESR-REIT (since succeeded by ESR-Logos REIT) for A$60.5 million, marking the Singapore-listed trust’s first acquisition from the sponsor group’s pipeline.

Phil Pearce, chief executive of ESR Australia, credited a fully integrated platform and the strength of the team as key drivers behind the group’s ability to source opportunities and create value for the EALP series of partnerships with GIC.

“ESR Australia is well placed to continue the momentum demonstrated by EALP II and is already undertaking due diligence on a number of initial seed assets for EALP III,” Pearce said. “Through the depth of the team’s local knowledge and their ability to quickly access and convert opportunities, ESR Australia has established its credentials for delivering strong returns to its investment partners.”

Dynamic Duo

Aside from their core-plus partnership, ESR and GIC have a develop-to-hold logistics fund, ESR Australia Development Partnership, which has four projects on the country’s eastern seaboard and a forecast completion value of A$1 billion.

GIC has committed A$400 million to the development partnership as a cornerstone investor, with ESR contributing an unspecified amount in return for a 60 percent stake in the venture.

The duo made news last year when their ESR Milestone Partnership acquired the 45-asset Milestone logistics portfolio from private equity giant Blackstone for A$3.8 billion, notching Australia’s largest-ever direct real estate sale.

ESR has more than $140 billion in assets under management. ESR Australia’s AUM totalled A$12.7 billion and 3.8 million square metres of gross floor area at the end of June.