ESR Unit Advises Samsung on €132M Buy of AEW Czech Warehouse

ESR’s Kendall Square Asset Management has acted on behalf of Samsung Securities to acquire the largest logistics facility in the Czech Republic for €132 million ($146 million), according to people close to the deal who spoke to Mingtiandi.

A source with knowledge of the transaction confirmed that the South Korean unit of ESR assisted the investment brokerage in purchasing the 125,000 square metre (1.3 million square foot) asset near Prague from AEW’s logistics arm, Logistis.

Located 22 kilometres west of Prague in Dobroviz, the facility is leased to e-commerce giant Amazon through 2030 and will be managed jointly by the UK’s Roebuck Asset Management and an investment vehicle managed by Kendall Square.

“Acting as a gateway to Germany, this asset is located in one of central eastern Europe’s most sophisticated logistics hubs,” said Stuart Jordan, managing director of Savills Czech and Slovak Republics, which advised on the deal.

The cross-border logistics investment points to possible new revenue streams for Kendall Square, which became part of Warburg Pincus-backed warehouse investment firm e-Shang in 2014, before that company evolved into ESR in 2016. Now spanning Korea, Greater China, Singapore and Australia, ESR made a HK$12.6 billion ($1.6 billion) debut on the Hong Kong stock exchange last month.

Serving Amazon Customers Across Europe

Completed in 2015, the PRG2 Amazon facility is part of a 255,000 square metre logistics park adjacent to Prague’s Václav Havel International Airport which AEW had purchased for €150 million four years ago on behalf of a logistics investment fund.

According to people familiar with the matter who spoke with Mingtiandi, the e-commerce giant is paying €3.79 per square metre per month for the facility, which equates to an annual rental income of €5.7 million.

“Amazon Prague is undoubtedly a best in class logistics centre, offering attractive rental growth prospects while playing a mission-critical role to the tenant,” said David Hidderley, global head of  investment for Roebuck Asset Management.

The Dobroviz park also includes four other standalone warehouses that were not included in the sale to Samsung Securities.

According to South Korean media, the Seoul-based brokerage is funding the transaction with KRW 80 billion ($69 million) in cash and is borrowing the remainder at a one percent rate from lenders in South Korea.

The transaction marks the second acquisition by a South Korean investor of an Amazon-leased property in Europe in just five months after a consortium consisting of Mirae Asset Daewoo, NH Investment & Securities and AIP Asset Management in June teamed up with the UK’s Valesco Group to purchase a Slovakia office building leased to the e-commerce giant for €120 million.

ESR’s Korean Unit Branches Out

The Czech transaction adds to the prospects for ESR’s South Korean operation, which had already built up a portfolio of 25 properties under management at a combined value of $3.7 billion through the end of June, according to the company’s IPO prospectus.

The business generated a revenue of $15.6 billion in South Korea during the first six months of this year, which represented ten percent of ESR’s total revenue of $155.8 billion in the period.

Just over a year ago Kendall Square established a new $500 million joint venture with the Canada Pension Plan Investment Board (CPPIB) targeting modern logistics facilities in Korea.

Continuing South Korea’s European Shopping Spree

The Prague acquisition continues a bumper year of investment in Europe by South Korean investors, which saw €7.7 billion in acquisitions coming from the East Asian nation from January through July.

That total saw investments by South Korean institutions during the first seven months of 2019 already exceed the 2018 full year total by 13 percent, with the trend continuing in recent weeks.

Just two months ago, Korea’s Meritz Securities was reported to be close to sealing a deal to buy the 36-story Finance Tower in Brussels for €1.3 billion.

A month before that news, Hana Financial teamed up with Munich-based Wealthcore Investment Management to acquire the Hilton Parkview hotel in Vienna for €370 million.

In July, a Mirae Asset Daewoo-fronted consortium acquired the Majunga Tower in Paris for KRW 1.08 trillion ($925 million).