Operations Review 22 STRENGTH IN UNITY NEW ECONOMY FOCUSED FUND MANAGEMENT PLATFORM ESR Group has a high quality and diversified asset portfolio under management in the APAC region, with Fee-related AUM1 valued at approximately US$81 billion as at 31 December 2023. The Group is committed to its strategic New Economy real assets focus which comprises industrial and logistics real estate, as well as emerging growth areas such as data centres and infrastructure. ESR Group’s strategy is to build dominant market positions across all the major APAC markets. Combined, these markets contribute nearly 95% of the Group’s Fee Income2. ESR Group’s business is underpinned by experienced on-the-ground local teams with capabilities spanning greenfield and brownfield development, leasing, facilities management, property and asset management, and investment management. The Group has built a strong brand reputation in the markets in which it operates as well as established solid local and global relationships with key stakeholders in each market. Fee Income2 by Geography* 36% Japan and South Korea 22% India and SEA 6% U.S. / Europe 21% Australia/New Zealand 5% Hong Kong 11% Mainland China US$737 million The Group is focused on growing its foundation of stable and predictable earnings and now has more than 60% of its Fee-related AUM in longer-term core or perpetual vehicles. This has in part been achieved by establishing or growing public REITs and new perpetual core vehicles such as what the Group has established in various markets across the region. This contribution is anticipated to increase as ESR continues to actively pursue the augmentation and growth (organic and inorganic) of such funds and REITs. After the financial year end, in February 2024, ESR announced the launch of its first perpetual, open-ended logistics core fund in South Korea, achieving over 25% net IRR for the ESR-KS Development Fund 1 investors. The debut of the Korea Core Fund complements ESR Korea’s product offering and fund structures which now includes a full suite of investment vehicles spanning development, core-plus/value-add and a listed REIT. The Group is focused on replicating this same closed-loop ecosystem in other key markets in which ESR operates. HEALTHY CAPITAL RAISING AMID CHALLENGING ENVIRONMENT Against the backdrop of a subdued capital raising environment within the APAC region, ESR Group achieved a capital raise of US$7.5 billion in FY2023. Of this, US$2.7 billion was driven by New Economy, which bolstered the Group’s New Economy dry powder to approximately US$13.5 billion. The Group is actively deploying capital for the APAC Infrastructure Fund as well as the ESR DC Fund 1 which achieved its final close of US$1.35 billion. For FY2023, ESR Group raised 24 new or upsized funds and mandates alongside diversifying its investor base with the addition of 11 new strategic capital partners. Investors remain committed to allocating capital into APAC New Economy real assets as structural long-term trends such as a growing middle class, increasing disposable income, growing e-commerce and increasing demand for data continue to underpin growth in the sectors which ESR targets. In response to changing investor dynamics, the Group has been successful in pivoting its efforts in Mainland China to focus on onshore RMB capital sources and in 2H2023 closed a RMB10 billion China Income Fund, its largest-ever RMB income fund, seeded with portfolio assets from ESR Group’s balance sheet. Opo A, B, C Logistics Park, Gyeonggi-do, South Korea Notes: 1. Fee-related AUM excludes AUM from Associates and levered uncalled capital. Based on FX rates as at 31 December 2023. 2. Fee Income refers to the Fund Management segment revenue. * Percentages may not sum up due to rounding
RkJQdWJsaXNoZXIy MTIwODcxMw==