ESR AR 2019 EN

and funds management platform, poised for next level of growth. In India, we have a joint venture with Allianz for the development of logistics and industrial facilities which holds approximately US$500 million in assets under management as at 31 December 2019. In each country we have consistently followed the approach to partner with the best-in-class local management teams and have brought our blue chip investors and tenants network along with us on this journey. For FY2019, we recorded a strong growth of 38.7% in assets under management (AUM) to US$22.1 billion as at 31 December 2019, underpinned by strong valuation gains, development completions and acquisitions across the platform, as well as the opening of new funds. With our growing and extensive reach across Asia Pacific, we are well-positioned to support our tenants in their regional expansion plans. In FY2019, we continued to see strong leasing demand with 2.0 million sqm of space leased across our portfolio, representing approximately 12% of the portfolio GFA. OUR THREE PILLARS OF BUSINESS ESR uses capital in order to acquire land and finance the development of logistics properties. The capital comes either from our balance sheet or the funds and investment vehicles that we manage alongside our institutional capital partners. Ultimately, when the properties are built and stabilised, the assets are sold (often to other institutional capital partners so that we can retain the management and tenant relationship) and we recycle the capital for new projects. Based on our products and services, we have three reportable operating segments: development, fund management and investments. Assets Under Management (US$ billion) As at 31 December 2019 Balance Sheet Core Funds Development Funds FY2019 FY2018 1.9 4.8 9.3 2.9 6.8 12.4 22.1 16.0 China 21% Japan 36% South Korea 21% Singapore 13% Australia 7% India 2% Assets Under Management As at 31 December 2019 Key Drivers of Our Three Pillars of Business Completed properties on balance sheet (B/S) Rental income + revaluation gains on non- development properties Fund co-investments Pro rate earnings Listed securities Dividend income Solar energy income B/S development profits Revaluation gains on properties under construction + disposal gain on sale Funds’ development profile Construction income Base / Asset management fees Development fees Acquisition fees Leasing fees Promote fees INCOME Direct costs for rental and solar energy income Allocated administrative expense Construction costs Allocated administrative expenses Allocated administrative expenses EXPENSES √ Rental growth and high occupancy √ Cap rate compression √ High dividend payout from listed securities √ Significant development pipelines (B/S, funds) √ Track record of strong development profit margins √ Asset recycling from B/S or development funds into core funds / REITs √ Strong fund AUM growth √ Significant development pipelines in funds √ Promote fee opportunity KEY DRIVERS Investment Fund Management Development 41 ESR Annual Report 2019 OPERATIONS REVIEW AT A GLANCE