GIC, ESR Announce $750M India Warehouse Development JV

Singaporean sovereign fund GIC and Hong Kong-listed developer ESR are pursuing their mutual interest in India’s industrial real estate market — this time together — with the launch of a $750 million joint venture to build and acquire industrial and logistics assets in the country.

GIC will hold an 80 percent stake and ESR the remaining 20 percent in the JV, which remains subject to regulatory approvals, according to a joint press release issued Tuesday. The aim is to develop and own institutional-grade industrial facilities across India, while also acquiring core assets in tier one and tier two cities.

The venture will be seeded with a 2.2 million square foot (204,387 square metre) build-to-core asset near the consumption hubs of Mumbai and Thane.

Together Again for the First Time

“We are pleased to establish this joint venture with ESR, a leading integrated logistics platform, to develop and acquire high-quality industrial and logistics assets in prime locations in India,” said Lee Kok Sun, GIC’s chief investment officer of real estate. “GIC has been investing in India for more than a decade, and this investment is a testament to our confidence in the long-term potential of this market.”

While GIC and ESR have invested separately in India and worked together on projects elsewhere, the joint venture marks the pair’s first collaboration in India.

In January of this year, the two companies had announced a $500 million joint venture to develop logistics facilities in China, and the Singaporean fund had previously worked with ESR as one of two external investors in ESR Japan Logistics Fund III.

In September, GIC announced it was committing A$480 million ($337 million) to a logistics development partnership with ESR in Australia, upping its stake in ESR Australia Logistics Partnership to 80 percent.

The news came less than three months after GIC had closed on an initial commitment to take a 45 percent slice of the EALP platform. ESR retained a 20 percent stake in the vehicle.

Finding India Opportunities

Earlier this month, a GIC affiliate signed a term sheet with Phoenix Mills to set up a retail-led mixed-use platform seeded with shopping centres in Mumbai and Pune from the Indian developer’s portfolio.

Through the joint venture, GIC will invest in the Phoenix Mills portfolio by taking an initial 26 percent stake in the venture, which it may increase to 35 percent within a year of closing.

The Singaporean fund has also set up a real estate joint ventures in India with local developer K Raheja in 2017, and last year set up a JV with hotel specialist IHCL to acquire hospitality properties.

ESR are also veterans of the India market, including having in January announced plans to develop a 300,000 square metre logistics park on a development site in Haryana state, envisioning one of the largest logistics facilities in northern India. In August, the company agreed to buy a 39 acre (15.8 hectare) site in Chennai’s Oragadam industrial belt, with plans to build an industrial park at an estimated investment cost of $43 million for the entire project.

“We have a strong conviction in the growth prospects of India’s logistics real estate,” Jeffrey Shen and Stuart Gibson, co-founders and co-CEOs of ESR, said in Tuesday’s press release. “Our seasoned local management team, led by Abhijit Malkani and Jai Mirpuri, will continue to leverage our prime logistics assets, deep market expertise, unrivalled track record in fund management and asset management to reinforce ESR’s robust growth and leading position in the Indian market.”

Owning the Lion’s Share

Warehouse joint ventures with an 80:20 shareholding structure weighted towards GIC have become a common theme in the sovereign fund’s investments this year.

In addition to the two link-ups with ESR, last week GIC announced a collaboration with US-based property investment manager Kennedy Wilson on the acquisition and management of urban logistics properties in Britain, while leaving open the possibility of further expansion into Ireland and Spain.

GIC will have an 80 percent stake in the joint venture, while Kennedy Wilson will have 20 percent and be responsible for sourcing, buyouts and management of assets.

The JV will start with a portfolio of 18 urban logistic assets in the UK. The $220 million portfolio is fully owned by Kennedy Wilson at present.