Jiangsu Friend Warehouse
Courtesy of ESR Group
ESR Group, Asia’s largest real estate fund manager by assets under management, said on Monday that China’s securities regulator has approved the company’s proposed domestic listing of its China REIT.
The REIT, called ESR C-REIT, is expected to raise about 2.4 billion yuan ($340 million). ESR, the sponsor of ESR C-REIT, will subscribe to 34% of the shares in the IPO. The remaining 66% will be subscribed by Cornerstone Investors, public institutions and private investors, ESR said in a statement.
“The ESR C-REIT joins our stable of perpetual capital vehicles across Asia Pacific and completes the full range of investment products we offer to institutional and retail investors in China, providing them access to the attractive fundamentals of China’s logistics real estate sector, which continues to benefit from favorable tailwinds, in a listed and liquid format,” Jeffrey Shen, co-founder and co-CEO of ESR Group, said in the announcement.
ESR has over 170 assets under management in China, with over $30.7 billion in assets under management and approximately 14.9 million square meters of total floor area. Approximately 70% of ESR’s stable assets in China (assets with a predictable income stream) are located in the affluent Yangtze River Delta region and the Guangdong-Hong Kong-Macao Greater Bay Area, a new economic zone linking Hong Kong and Macau with mainland China. Both regions have strong demand from the renewable energy industry and cross-border e-commerce, ESR said in a statement.
According to the Zhejiang Provincial Government, the Yangtze River Delta’s gross domestic product will exceed 30 trillion yuan in 2023, accounting for about 24.2% of China’s total GDP, while the Guangdong Provincial Government expects the GDP of the Guangdong-Hong Kong-Macao Greater Bay Area to exceed 14 trillion yuan in 2023.
ESR C-REIT is comprised of three self-owned logistics facilities in Kunshan, a city in eastern China’s Jiangsu Province near Shanghai. Collectively known as Jiangsu Friend Warehouse, the three logistics facilities have a combined total floor area of more than 426,000 square meters. ESR began developing Jiangsu Friend Warehouse in 2011, and the facility has reportedly had an average occupancy rate of over 90 percent over the past five years, housing multinational companies from sectors including logistics, e-commerce and fast-moving consumer goods.
“We believe this portfolio provides a platform for us to continue growing the C-REIT by contributing additional assets from our portfolio and further opportunities to work with financial institutions and investors in China,” said Stuart Gibson, co-founder and co-CEO of ESR Group, in the announcement. “Strong consumption growth in China is supporting high tenant occupancy rates, translating into stable and sustainable returns for our investors.”
ESR, whose chairman is Jeffrey Pearlman, president of Warburg Pincus, is the world’s fourth largest listed real estate investment management company with $156 billion in assets under management and the largest in Asia. The company owns and manages approximately 50 million square meters of real estate in about 30 countries around the world, mainly in the fields of logistics and data centers.
