ESR Group Limited Annual Report 2023 23 FY2023 CAPITAL RAISE Fund Type Region Capital Raise (US$ million) Development APAC Data Centres 1,133 SEA 192 Australia 140 Mainland China 94 South Korea 24 Subtotal 1,583 Core Mainland China 737 South Korea and Japan 185 Pan-APAC 100 SEA 19 U.S., UK and Europe 522 Subtotal 1,563 Credit Europe/South Korea 4,340 Total 7,486 BUSINESS TRANSFORMATION AND SIMPLIFICATION ESR Group is focused on completing its business transformation and simplification through streamlining its business to focus on the management of New Economy real assets. Ongoing initiatives include the sell-down of more assets from ESR Group’s balance sheet into ESR-managed vehicles (including the listing of ESR's C-REIT on the Shanghai Stock Exchange), divestment of non-core assets and businesses that do not fit within its New Economy focus, and driving cost synergies post the completion of the integration of various businesses. Investments in Joint Venture Associates (“JVA”) by Sector As of 31 December 2023 71% New Economy 29% Traditional Economy US$3.4 billion Investments in JVA (New Economy Sector) by Region 26% Mainland China 22% India and SEA 22% Australia 13% Hong Kong 17% South Korea US$2.4 billion On balance sheet optimisation, Mainland China remains a key focus for ESR Group. Concerted efforts are being spent on completing the US$0.8 billion worth of transactions that were announced last year, including the launch of the C-REIT. The sale of balance sheet assets to a domestic insurance company were partially completed, with the rest and the C-REIT launch targeted to complete in 2024. Further to this, management has also earmarked a further US$1.5 to US$2.0 billion of assets located mainly in Mainland China, Hong Kong, Japan and India that are now well positioned for divestment or further syndication. The aggregate net proceeds from all these asset and syndication initiatives are sizable — at over US$2.0 billion. These planned sell-downs alongside the announcement of non-core divestments are expected to reduce the Group’s gearing over the medium term towards the low end of the Group’s target gearing range of 20–30%. As of 31 December 2023, the total value of the investment properties held on ESR’s balance sheet was US$3.2 billion. This accounted for approximately 2.1% of total AUM across the portfolio as at 31 December 2023. As a result of a deliberate strategy to optimise the Group’s balance sheet over the past several years, only about 4% of the US$14 billion work-in-progress is undertaken on the balance sheet. Refer to “Property Portfolio” on pages 27 and 28 for more information on ESR’s Balance Sheet investment properties. Investment Properties As of 31 December 2023 61% Completed 39% Under Construction US$3.2 billion In line with ESR’s focus on streamlining its business, the divestment of the ARA Private Funds (“APF”) platform was announced on 11 March 20243. The sale of APF will achieve net proceeds of approximately US$290 million and will rebalance ESR towards its New Economy core. This marks the first signed and announced divestment towards a target of US$750 million non-core disposals for ESR Group, with other sale processes commenced or in planning stages. Additionally, the full integration of LOGOS is well underway with the combined platform able to fully leverage its economies of scale and the skills of two best-in-class management teams. In Australia, the combined business is the second largest with the largest development pipeline in the market and combining the businesses across key SEA markets provides the scale that ESR’s investors are looking to capture in this burgeoning growth region for New Economy assets. Note: 3. Refer to Announcement “Disclosable Transaction In Relation to Sale of ARA Private Funds Business” dated 11 March 2024. STRATEGIC REPORTS CORPORATE GOVERNANCE FINANCIAL STATEMENTS
RkJQdWJsaXNoZXIy MTIwODcxMw==