Private investment firm Starwood Capital Group has agreed to acquire a 10.7% equity stake in ESR Group, the third-largest real estate manager in Asia, according to an announcement.
Financial details of the deal, which is structured alongside ESR co-founders Stuart Gibson and Charles de Portes, were not disclosed.
The deal will be carried out by a controlled affiliate, Starwood said, and will see all of the outstanding sums under the existing margin loan facility of the holding vehicle of the co-founders to be fully extinguished.
After the acquisition, Gibson will remain co-chief executive officer and an executive director of ESR while Portes will remain a non-executive director of the company.
“ESR is the leading real estate platform in Asia Pacific with important market positions in logistics and data centres, which are key growth areas for Starwood Capital,” Barry Sternlicht, chairman and CEO of Starwood Capital said.
Starwood, which focuses on global real estate, has invested in virtually every category of real estate on a global basis, opportunistically shifting asset classes, geographies, and positions.
It has 16 offices in seven countries and about $115 billion of assets under management.
ESR, on the other hand, manages around $156 billion in total assets, including warehouse and data centres, across key APAC markets, including China, Japan, South Korea, Australia, Singapore, India, New Zealand and Southeast Asia.
In 2019, the firm raised around HK$14 billion in its public debut on the Hong Kong stock exchange.
“Starwood Capital’s support will allow ESR to continue to focus on delivering for our customers, shareholders, and capital partners,” Gibson said.
ESR earlier said it is streamlining its business to double down on its New Economy focus, which includes e-commerce, digital / AI, and biopharma.
Early this month, the firm announced that it has agreed to sell its ARA Private Funds (APF) business to entities that include an affiliate of Sumitomo Mitsui Finance and Leasing Co for an enterprise value of $270 million.
The APF business that ESR is divesting primarily consists of finite-life funds owning assets in traditional real estate sectors, including office spaces, retail outlets, and hospitality venues in Australia, Singapore, South Korea, and the US.
The management platform for Singapore Exchange-listed ARA US Hospitality Trust does not form part of the transaction, ESR said.
In total, 22 funds are being divested as part of this transaction, representing $9.8 billion in total assets under management. The assets are outside of ESR’s core New Economy focus.
The divestment comes more than two years after ESR completed its $5.2 billion acquisition of real estate fund manager ARA Asset Management, including its subsidiary LOGOS.
In August last year, the Hong Kong-listed real estate group announced raising $2 billion through 15 new or upsized funds and mandates — 80% of which are dedicated to the new economy sector.
In Southeast Asia, the group also held the first close of its development fund for Indonesia assets and a new mandate in Vietnam, ESR said in the first-half earnings call without divulging further details.
