ESR Cayman Ltd, a Warburg Pincus-backed global logistics real estate, has announced the closing of its $1-billion joint venture in South Korea with Dutch pension administrator APG and Canada Pension Plan Investment Board (CPP Investments).
The venture – ESR-KS II – is APG’s fourth development collaboration and CPP Investments’s third joint venture with ESR. It 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 ESR-KS II close reflects the excellent relationship we have with our capital partners and is a testament to the strong track record we have achieved in previous collaborations,” Jeffrey Shen and Stuart Gibson, co-founders and co-CEOs of ESR, said.
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. The partners also have the option to bring the total equity investment capacity to as much as $2 billion over time.
ESR-KS II will be seeded initially with a prime land site situated in Incheon City, on which a modern facility with a gross floor area of 154,422 sqm and a gross value of approximately W240 billion ($197 million) will be developed.
Thomas Nam, CEO of ESR-Kendall Square, ESR’s South Korean platform, said the venture will continue to identify quality assets and projects in the country, where e-commerce breakthroughs and a shortage of modern warehousing space are fuelling the continued growth of the logistics sector.
Recently, ESR 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.