ESR Group Limited Annual Report 2023 17 Strong capital position sustains value creation Through our proactive capital management strategies, we have maintained a strong capital position with ample liquidity of an aggregated US$2.5 billion of cash and loan drawdown capacity. We successfully diversified the Group’s funding sources through various initiatives in the year including a US$1.2 billion multi-currency revolving credit facility secured with various foreign banks, the closing of JPY30 billion of Japanese Yen-denominated fixed rate bonds, and a series of seven sustainability-linked loans. Furthermore, once our announced transactions in 2023 are completed, with proceeds applied towards debt repayment, our Gearing over the medium term is expected to reduce towards the low end of our Gearing target of 20–30%. Building a sustainable future In line with our purpose to provide Space and Investment Solutions for a Sustainable Future, we have made significant progress across the three key pillars under the ESG Framework — “Creating a Human Centric environment that is safe, supportive and inclusive for stakeholders”, “Developing and maintaining a sustainable and efficient Property Portfolio” and “Delivering outstanding Corporate Performance for sustained and balanced growth”. To build a more inclusive and equitable workplace, our female representation increased to approximately 45.4% as at end 2023. Across the Group, community investment efforts continue to be implemented under three dedicated focus areas, namely: “Strengthening Social Resilience, Health and Well-being”, “Promoting Education & Upskilling”, in addition to “Protecting the Environment”. On the environmental front, as part of our focus on developing and maintaining sustainable and efficient buildings, we have since installed a total of 112 MW of rooftop solar power capacity as well as 809 EV charging stations across our portfolio. In addition, we have launched synergistic partnerships, including in some cases with tenants, in our collective transition towards a low-carbon future. Over 42% of our portfolio of completed, directly managed assets have obtained sustainable building certifications and ratings, such as LEED, WELL and NABERS. We are committed to upholding the utmost standards of corporate governance to ensure accountability, transparency, fairness, and integrity across all of our operations. Our ESG commitment further enabled us to strengthen our leadership in sustainable financing, with seven sustainability-linked loans worth approximately US$4 billion closed. We are heartened that our robust ESG disclosure practices continue to receive recognition by maintaining rankings across various global ESG benchmarks and ratings, such as GRESB, MSCI, Sustainalytics, and ISS. An example of how we put this approach into practice is the development of ESR Higashi Ogishima Distribution Centre in Japan, which emerged as the only Asian winner of top honours at the recent global MIPIM Awards 2024, garnering the “Best Industrial & Logistics Project” and “Special Jury Award” accolades. ESR Higashi Ogishima Distribution Centre incorporates sustainability features including a seismic base isolation structure and 2.5 MW solar self-consumption installation, and human-centric amenities such as a BARNKLÜBB that extends free day care for children of workers. Looking ahead Enhancing investor value remains a key priority for us, and we remain positive on the demand for New Economy assets across APAC which continues to benefit from long-term structural tailwinds, driven by the continued rise of e-commerce, technology advances in artificial intelligence ("AI") and life sciences, and the rise in renewables as the energy transition gathers momentum. We have a clear and resolute path to sustained growth. This includes forging ahead with our business transformation and simplification priorities on various fronts to unlock value. On the operations front, we expect market demand and supply drivers in our key operating markets of Australia, Japan and Korea to support high occupancy rates and rent growth in 2024. In addition, our priority includes achieving a sustained growth in Fee-related AUM and fund management earnings. We will remain cautiously optimistic on deploying US$23.9 billion of dry powder (of which over US$13 billion is in New Economy) in the second half of 2024, specifically in growth opportunities in ESR’s data centre and SEA platforms. In this ever-changing external environment, we expect our balance sheet to remain well-capitalised with a plan to further reduce our Gearing with balance sheet divestments. As we expect a y-o-y reduction in interest expense for FY2024 on lower debt and hopefully reduced base rates, we will also refinance some of the existing debt with longer term fixed rate debt to achieve a more balanced mix of fixed and floating debt. This will allow us to be well-positioned to support our long-term AUM growth. We would like to take this opportunity to thank our investors and customers for their trust and support, our Board of Directors for their vision and guidance, and our management team and colleagues for their dedication and commitment as we continue to solidify ESR’s leadership in APAC’s New Economy. STUART GIBSON AND JINCHU SHEN Group Co-founders and Co-CEOs 21 March 2024 STRATEGIC REPORTS CORPORATE GOVERNANCE FINANCIAL STATEMENTS
RkJQdWJsaXNoZXIy MTIwODcxMw==