Pan-Asian logistics real estate developer and operator e-Shang Redwood (ESR), has closed a $300 million pre-IPO investment from a consortium of Chinese investors which includes GF Investments (HK), Huarong International, Huarong Rongde, SPDB International, China Everbright Limited, Everbright Securities and CMBC International.
The company – that was formed in January last year, when Singapore-based logistics fund manager, Redwood Group Asia, merged with Shanghai-based developer and operator of warehouses, e-Shang Cayman, to create one of the largest logistics real estate platforms in Asia, – focuses on developing modern, institutional quality warehouses across major gateway markets in this continent, and it currently claims to have 6.5 million square meters of projects in operation or under development in China, Japan and South Korea, with another over 6 million square meters in pipeline.
On the pre-IPO placement, Jeffrey Shen, the Co-CEO of ESR, said, “The investment by the Chinese consortium is an important endorsement of ESR as well as in the growth potential of logistics real estate and modern warehousing in China and across Asia.”
“2016 has been a very strong year for us with the completion of the Redwood merger, the substantial increase in development starts in our core markets of China, Korea and Japan on the back of robust market demand from our best-in-class tenant relationships and the establishment of new financing (both equity and debt) institutional relationships in each of our markets. The company is well positioned to further accelerate its growth and solidify its market leading position across Asia over the next few years,” he added.
The latest investment comes within months of the company raising $750 million in equity commitments for its second Japan-focused logistics real estate fund, and DEALSTREETASIA has learnt that the firm is set to hit its target $1 billion final close soon. Just prior to that, the company had secured $300 million from Ping An Real Estate, the property arm of Ping An Insurance (Group) Company of China, to co-invest in future Japanese logistics projects.
e-Shang, initially founded in 2011 by global private equity firm Warburg Pincus with Jeffrey Shen and Dongping Sun, was one of the top developers of modern warehouses and largest third-party landlord for the leading e-commerce companies in China and South Korea. Redwood, founded in 2006 by Charles de Portes and Stuart Gibson, was a specialised logistics real estate firm with projects in prime locations across Japan and China.
Elyn Xu, Head of Structured Finance from GF Holdings (HK), said: “We are very impressed by ESR’s fast growth and strong execution capabilities, which has laid a solid foundation for the company’s future.
“Modern warehousing will continue to benefit from the rapid development of e-Commerce and the transformation of the retail sector in Asia and we believe ESR is well-positioned to further enhance its strong leadership position. The Investors are excited to become long-term partners with ESR with the goal of expanding our relationship over time to include other strategic products and partnerships,” Xu added.
According to a report by real estate consultancy Colliers, the growth of e-commerce is driving Third Party Logistics (3PLs), which is reshaping investments, due to requiring smaller scale logistics warehouses and extensive network coverage across East Asian markets.
Current trends and patterns in the industry will see more developers building multi-storey logistics centres, in order to facilitate proximity to city centres and residential neighbourhoods, as well as to capture growing demand. This also corresponds to increasing industrial land price in East Asian markets.
The emergence of new e-commerce services such as E-fulfilment, delivery consolidation, e-groceries and reverse logistics will also change the overall logistics real estate market landscape, particularly with regards to the siting of logistics developments.
Future developments will see a shift towards having logistics developments that can service city centres, with a focus on extra added-value spaces for working and packing, extra cooling and heating facilities for staff and higher ceiling height.