Canada Pension Plan Investment Board (CPPIB) and Hong Kong-listed logistics real estate platform ESR Cayman Ltd on Thursday announced an expansion of their Korea income joint venture.
CPPIB and ESR will collectively upsize their investment in the vehicle by a further $500 million, with the Canadian pension fund contributing the majority of the capital, per a joint statement. The new capital will effectively double the size of the venture to $1 billion in total equity allocation.
The Korea Income JV was established in 2018 to focus on investments in income-producing logistics assets located in major metropolitan areas of South Korea. Managed by ESR Kendall Square, ESR’s South Korean platform, the portfolio consisted of 12 institutional-grade modern logistics facilities with an aggregate gross floor area (GFA) of 774,666 sq metres. Six of the 12 assets were divested to ESR Kendall Square’s Korea Logistics REIT in December 2020.
“Korea is already one of the most developed e-commerce markets in Asia and the pandemic has accelerated the growth in the past year, further fuelling the demand for quality logistics facilities,” CPPIB Asia Real Estate head Jimmy Phua said.
“The demand and long-term prospects of high-quality logistics facilities continue to show stable growth, especially as e-commerce adoption and structural changes in supply chain management have been driven forward during the COVID-19 pandemic,” said ESR Kendall Square CEO Thomas Nam.
In addition to the Korea Income JV, CPPIB and ESR have collaborated on two other joint ventures focused on the Korean logistics sector since 2015.
Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPPIB is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. As of Dec 31, 2020, the fund totalled C$475.7 billion ($380.52 billion).
Listed on the Main Board of Hong Kong Stock Exchange, ESR is the largest APAC focused logistics real estate platform by GFA and by value of the assets owned directly and by the funds and investment vehicles it manages. Co-founded by its senior management team and Warburg Pincus, ESR and the funds and investment vehicles it manages are backed by investors including APG, SK Holdings, JD.com, CPP Investments, Oxford Properties and PGGM.
Its platform spans China, Japan, South Korea, Singapore, Australia and India. As of Dec 31, 2020, the fair value of the properties directly held and assets managed by ESR and associated funds was approximately $30 billion.