Operations Review FORWARD TOGETHER 34 NEW ECONOMY DEVELOPMENT SEGMENT FY2022 KEY HIGHLIGHTS • Development WIP of US$11.9 billion — the largest in APAC • Record new development starts of US$6.5 billion • Strong landbank of over 6.4 million sqm across combined portfolio • Robust development pipeline of 27.8 million sqm NEW ECONOMY DEVELOPMENT SEGMENT We have established efficient, high-quality and scalable capabilities for greenfield and brownfield developments in each country where we operate. Our extensive inhouse expertise includes selection and acquisition of sites to the design, construction and leasing of modern logistics facilities. These facilities are characterised by several attributes that differentiate modern logistics (greatly preferred by today’s e-commerce tenants) from the existing installed base of traditional warehouse: • Optimal space utilisation: Large floor plates, high ceilings and wide column spacing • High floor load capacity: to support the increased weight of taller racking and automation equipment • High operating efficiency: Spacious loading and parking areas equipped with modern loading docks • Storage safety: Security and surveillance features, proper ventilation and basic fire-fighting features such as sprinkler systems • Flexibility to provide customised features: Office space, air-conditioning and refrigeration/freezing. We capitalise these development projects through our funds and investment vehicles that we manage and/ or through our balance sheet. We earn development fees from our partners when we use capital from Fund Management (attributed to the Fund Management segment), and we earn development profit upon sale of completed properties when we use our balance sheet. We also derive pro rata earnings and pro rata value appreciation through the development activities of the development funds and investment vehicles we manage in proportion to our co-investments in those funds and investment vehicles. All of our development related capital gains are attributed to our Development segment. ESR continues to leverage third-party capital to fund developments and exercise a disciplined asset light approach to achieve our targeted development completions. In FY2022, the total estimated investment value of new development starts totalled US$6.5 billion, primarily in Japan, Australia, China, Japan, South Korea, Southeast Asia and India. The new projects represented 5.2 million sqm across the portfolio. Strong customer demand, particularly from e-commerce related customers, has translated to a strong growth of 68% year-on-year growth in development work in progress (“WIP”), as the Group’s current developments focus on higher value projects with increased scale and higher quality. In FY2022, the Group had a robust US$11.9 billion development WIP — the largest development workbook in APAC. Our development workbook is well-spread across our key APAC markets, and the Group is well-placed to benefit from a strong pipeline of quality, large scale developments. These are projects that will act as cornerstones of our core funds, local REITs and as key assets in the growth of ESR-LOGOS REIT upon completion and stabilisation. In the near term, we can expect the completion of the larger scale projects including ESR Higashi Ogishima and ESR Sachiura Distribution Centre 2 in Japan and Pyeongtaek in Greater Seoul, South Korea. In FY2022, the total investment value of our development completions was US$5.5 billion, representing 4.2 million sqm across our portfolio. These included ESR Kawasaki Ukishima Distribution Centre, ESR Yatomi Kisosaki Distribution Centre and ESR Sachiura Distribution Centre in Japan, Opo Logistics Park P1 and P2 in South Korea, ESR Wenzhou Ruian Distribution Centre and Chengdu Qingbaijiang P1 and P2 in China. The Group has also assembled a robust development pipeline of 27.8 million sqm, including a strong landbank of 6.4 million sqm to expand our portfolio moving forward, and leverage on the strong customer demand for logistics facilities. Pyeongtaek Logistics Park, South Korea
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