Global logistics real estate firm ESR Cayman Ltd has entered into a strategic partnership with Dutch pension administrator APG and Canada Pension Plan Investment Board (CPP Investments) to set up a $1-billion joint venture that will invest in South Korean logistics real estate.
ESR, APG, and CPP Investments have agreed to initially invest $200 million, $350 million, and $450 million, respectively, in the new development JV that will focus on developing industrial and warehousing logistics portfolio in Seoul and Busan.
The equity commitment gives ESR, APG, and CPP Investments 20 per cent, 35 per cent, and 45 per cent, respectively, of the total issued shares of the new joint venture that they named ESR-KS II. The partners also have the option to bring the total equity investment capacity to as much as $1 billion over time.
ESR-KS II is a successor to the $1-billion JV between the three partners that led to the development of 17 projects totalling 2.2 million square meters of gross floor area in the country. The vehicle was later upsized to $1.5 billion.
The vehicle, which represents one of the largest global logistics real estate capital raising so far this year, seeks to further explore logistics real estate opportunities in Seoul and Busan, two markets in South Korea with the largest populations and highest consumer spending.
“This will allow us to capture the next wave of growth and opportunity in a sector that even in these uncertain times is demonstrating resilience,” said Graeme Torre, head of Real Estate at APG Asset Management Asia.
The continued growth of South Korea’s e-commerce market is driving the demand for quality logistics facilities, according to CPP Investments, which has long considered Asia’s consumer sector as one of its key investment themes.
“This new joint venture deepens our longstanding relationship with ESR and APG. It will be key to our growth strategy in the logistics sector globally,” said Jimmy Phua, head of Asia Real Estate at CPP Investments.
ESR recently entered into a strategic partnership with Singapore’s sovereign wealth fund GIC to set up a JV with a total equity commitment of $500 million.
The joint venture, which marks ESR’s latest launch in a series of development vehicles, focuses on building institutional-grade logistics facilities in key cities across China.