ESR Group Limited (“ESR” or the “Company”, together with its subsidiaries as the “Group”; SEHK Stock Code: 1821), APAC’s largest real asset manager powered by the New Economy, has entered into an agreement with a leading global institutional investor (“Investor”) to
recap a prime logistics and industrial portfolio (total GFA of over 873,000 sqm) from ESR’s balance sheet. 

The transaction represents the largest self-developed 1 balance sheet sell-down for ESR to date, reinforcing the Group’s capital recycling strategy and asset-light approach. The portfolio, currently 98% occupied, consists of nine completed logistics and industrial assets with a total GFA of over 873,000 sqm, spanning major logistics and industrial hubs across different regions in China, including the Yangtze River Delta Region, the Greater Bay Area, and the Beijing-Tianjin-Hebei Region.

With the transaction, the overall core portfolio managed by ESR with the Investor now expands to over 1.4 million sqm. 

Recognising sustainability as an important element to protect and grow the value of assets, ESR seeks to launch ESG initiatives such as increasing the rooftop solar power generation for the portfolio, in line with the Group’s priority to further enhance energy sustainability with an aim to work towards a 50% increase in solar power generation capacity by 2025.

Jeffrey Shen, Co-founder and Co-CEO of ESR, said: “We are very pleased to further expand our relationship with one of our long-time capital partners, with whom ESR has built a strong relationship and track record across strategies and markets. Despite some near-term macro and geopolitical headwinds, this transaction is a further validation that institutional investors are increasingly drawn to the compelling long-term income potential of well-located, premium quality logistics portfolios in China developed by ESR.”

As APAC’s largest real asset manager and New Economy real estate platform, ESR Group has a development pipeline of 24.3 million sqm as well as WIP of US$10.5 billion, the largest in APAC. The development pipeline in China amounted to 6.9 million sqm and development activities remain strong on the back of record leasing by the Group in China of over 2 million sqm in 2021.

“This transaction also represents the largest sell-down of ESR self-developed balance sheet assets to date. It is in line with ESR’s focus on accelerating its asset-light strategy which is an integral part of our longterm growth plan. With the completion of this sell-down, ESR Group is well-positioned to achieve another record capital recycling year as we seek to take advantage of increasingly more attractive pipeline opportunities across APAC and build on the strength of our integrated platform, balance sheet, capital partners and customers to deliver long-term sustainable growth,” added Mr. Shen.

ESR Group continues to deliver on its asset-light strategy. In 2021, the Group sold down over US$800 million from its balance sheet. This translated into over US$500 million of net cash which was subsequently recycled back to the Group for future growth. In May 2022, ESR Group completed the successful tender of its 18.16% holding in China Logistics Property Holdings Co., Ltd (CNLP; SEHK Stock Code: 1589), representing US$350 million of gross proceeds which will be recycled to fuel other growth opportunities in the future.

The completion of the transaction is subject to regulatory approval.