ESR Group Limited Annual Report 2022 39 Capital Management ESR adopts a proactive and disciplined capital management approach, and regularly review its debt maturity profile and liquidity position. The Group maintains a well-capitalised balance sheet, and actively diversifies its funding sources through a combination of facilities with both local and international banks, and capital market issuances in optimising its costs of debt. ESR continues to be disciplined in executing its capital recycling programme, and prudently redeploying capital to support growth. The Group remains focussed on its asset light approach with US$1.7 billion of divestments from its balance sheet to ESR managed funds in FY2022, achieving three times its annual historical target with a specific focus on crystalising gains from selected China balance sheet assets. The sell-down of a 850,000 sqm portfolio in China represented the Group’s largest self-developed balance sheet sell-down to date. The Group also executed on the successful tender of its 18.16% holding in China Logistics Property Holdings Co., Ltd in May 2022, receiving US$349 million and delivering a strong return on this four-year investment. In addition, approximately US$1.3 billion of net cash was recycled back to the Group and is available to fund future growth across the region. We continue to actively leverage our fund management platform to unlock value and generate higher recurring fund management fees. The average co-investment for the Group was 7.4% as of 31 December 2022. This meaningfully enhances the Group's tangible return on equity while maintaining sufficient funding capacity across the Group. Debt Maturity Profile of Borrowings As of 31 December 2022 (US$ million) 290 1,220 910 3,077 2023 2024 2025 2026 and beyond 5% 22% 17% 56% Total borrowings of the Group was US$5.5 billion as of 31 December 2022. With well-capitalised balance sheet at US$1.8 billion in cash, the net debt over total assets was 22.8% as of 31 December 2022. Throughout the year, the Group continues to expand and diversify its funding and capital structure, which is crucial for fuelling the Group’s long-term growth. • In January 2022, the Group closed a 5-year JPY28 billion SLL which was upsized to JPY32.5 billion at Tibor +1.75%. • In May 2022, the Group closed a 5-year S$370 million SLL at SORA +1.6%. • In September 2022, the Group closed a 5-year HK$4.65 billion SLL at HIBOR +1.8%, which was further upsized to HK$8.88 billion subsequent to year-end. US$1.3 billion of refinancing efforts were also completed from 2H2022 till March 2023, with approximately 5% of total debt due in year 2023 as of 31 December 2022. STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENT
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