Warburg-backed ESR, Beijing Properties set up fund to buy realty assets worth $1b

Beijing Tongzhou Park, one of ESR's portfolio properties in China.

ESR Cayman, a Warburg Pincus-backed pan-Asia logistics real estate developer, is joining Hong Kong-listed investment holding firm Beijing Properties in establishing an offshore fund that will acquire Rmb6.42 billion ($1.01 billion) worth of properties.

The fund will acquire equity interests in properties directly or indirectly owned by China Logistics Infrastructures (CLI), a logistics subsidiary of Beijing Properties, according to a disclosure at the Hong Kong stock exchange.

CLI signed the letter of intent with ESR Cayman on Wednesday, a day after ESR received $306-million investment from Chinese online retailer JD.com.

Under the terms of the letter of intent, the fund will act as the purchaser in the acquisition of equity interests in a number of subsidiaries directly or indirectly owned by CLI, which own certain plots of land in China.

The value of the properties, as stated in the letter of intent, is approximately RMB6.42 billion, according to the filing.

CLI owns a number of logistics facilities and warehouses located in Tier 1 cities, including in Beijing, Tianjin and Shanghai, with an aggregate rentable area of approximately 809,431 square metres.

The capital investment to be made by each partner to the fund and the deal consideration have not been finalised as yet but ESR has agreed to deposit $45 million to a bank account that will be jointly operated by CLI and ESR, while CLI have agreed not to directly or indirectly negotiate with any other party under the exclusivity rule.

“The proposed transactions represent a good opportunity for the group to realize its investment in its logistics property business at a fair and reasonable price and would provide capital in developing the business of the group,” Beijing Capital said.

Being Capital intends to further improve strategic presence in the logistics property, industrial property and cold chain industries in China while actively conducting global allocation of assets.

ESR, which also runs capital and fund management offices in Hong Kong and Singapore, is one of the largest in the Asia-Pacific region, with assets under management of US$12 billion, and over 10 million square metres of projects owned and under development across China, Japan, Singapore, South Korea, and India.

The decision to partner with Beijing Capital comes a day after JD.com invested $306 million in ESR Cayman, paving the way for the two firms’ cooperation in areas including property development, fund management, and investment across the region.

ESR was formed by a merger between Shanghai-based warehousing services firm e-Shang and Singaporean logistics real estate investment firm The Redwood Group. e-Shang was co-founded by Warburg Pincus in 2011.

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