ESR Group Limited (“ESR” or the “Company”, together with its subsidiaries as the “Group”; SEHK Stock Code: 1821), today announced that its application for the registration and listing of ESR China REIT (“ESR C-REIT”) <中航易商仓储物流基础设施 REIT > has been received by the China Securities Regulatory Commission <中国证券监督管理委员会> and the Shanghai Stock Exchange <上海证券交易所>.

The Manager of the ESR C-REIT is AVIC Fund, a publicly offered infrastructure securities fund. ESR Group is the Sponsor of ESR C-REIT and unitholders in the REIT will benefit from ESR Group’s large portfolio of assets under management (“AUM”) and development work-in-progress (“WIP”) to provide a pipeline of potential acquisitions for ESR C-REIT. In China, ESR Group manages over 190 assets valued at US$30.8 billion.

ESR Group is APAC’s largest real asset manager with approximately US$150 billion of AUM and APAC’s largest sponsor and manager of REITs with a total AUM of approximately US$45 billion. The Group has global presence in 28 countries. The Group’s leading New Economy platform has approximately US$69 billion of New Economy AUM including logistics and data centre portfolios, and APAC’s largest New Economy development workbook of US$13 billion.

The ESR C-REIT will focus on New Economy logistics, e commerce and high-tech industrial manufacturing assets in Greater China, all of which are backed by strong secular growth trends. At inception, the REIT will comprise three logistics projects currently wholly-owned by the Group via Jiangsu Friend Warehouse Co., Ltd (the “Seed Portfolio”). These projects are all modern facilities with best-in-class specifications and design and strategically located in Kunshan, Jiangsu Province, China.

Kunshan is around 45 minutes from Shanghai and a major hub for the country's last mile logistics networks. With a total area of over 426,000 sqm, Jiangsu Friend Phase I has a gross floor area (“GFA”)of over 135,000 sqm. Jiangsu Friend Phase II has over 85,000 sqm of GFA and Jiangsu Friend Phase III has the largest area out of the three phases with a total GFA of over 206,000 sqm. The three assets have been built since 2018 with over 95% occupancy rate for the past four years, anchored by multinational brands from logistics, e-commerce to fast-moving consumer goods. The ESR C-REIT is expected to raise approximately RMB 2.88 billion. Starting from 2024, the annualised cash distribution rates are estimated to be around 4.4% and 4.5%.

China is rapidly expanding its domestic real estate investment trust (C-REIT) regime with the opportunity to sell portfolios of assets on the public markets offering new recapitalisation options for institutional investors in a growing range of market sectors. According to a report from UBS, the C-REIT market could reach US$3 trillion in market capitalisation by 2030 if China could securitise just 5 per cent of its infrastructure assets valued at US$60 trillion. 1 The C-REIT market would have then eclipsed the US REIT market, which has a current market capitalisation of US$1.4 trillion to become the world’s largest REIT market. 2 Stuart Gibson and Jeffrey Shen, ESR Group Co-founders and Co-CEOs stated: “Today, we are proud to mark another milestone for the company with the proposed ESR C-REIT. The C-REIT will further broaden the suite of public REITs that we manage and it opens up a new set of investors to the Group - domestic institutional and retail investors in China. As the leading manager of REITs in APAC, we strongly believe in the continued financialisation of real estate in APAC and especially in China. We are excited to be able to support, and be at the forefront of, the Chinese government’s plans to enable the securitisation of infrastructure projects. The proposed transaction helps to reinforce our leading market position in New Economy real estate and opens a new and exciting growth engine for the Group in China.”

“Accessing alternative forms of capital is important to ESR Group and REITs are seen as an important pillar for growth and capital diversification. The proposed C-REIT enables us to leverage the favourable legislative environment in China and potentially opens the door to new markets and opportunities for the Group across the region. Once established, the C-REIT enhances ESR Group’s capital market options in China and opens up a new channel to raise local capital,” said Chang Rui Hua, Managing Director

Business Management and Investment ESR Hong Kong Limited who is also responsible for the C-REIT initiative.

1 UBS: China Infrastructure Looking beyond 4% FAI growth in 2022E

2 National Association of REITS or Nareit