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. During FY2021, the Group continues to be focused on its asset light approach, with over US$800 million of divestments from balance sheet to ESR managed funds and received over US$500 million net cash which was subsequently recycled back for future growth. In May 2021, ESR-REIT embarked on its maiden overseas acquisition outside Singapore by taking a 10% stake in ESR Australia Logistics Partnership (“EALP”), an existing Australian core fund managed by ESR’s Australian platform. This transaction also marked ESR-REIT’s first acquisition from the Group’s APAC pipeline. In June 2021, ESR Kendall Square REIT also completed the acquisition of the Anseong Logistics Park from the existing core fund managed by ESR’s Korean platform. In July 2021, the Group fully exited its investment in Centuria Capital Group (“CNI”), a leading real estate fund manager in Australia, with A$272 million (approximately US$207.4 million) of total gross proceeds. The investment generated a 23.0% unleveraged IRR1. Total borrowings of the Group was US$4.2 billion as of 31 December 2021. With well-capitalised balance sheet at US$1.6 billion in cash, the net debt over total assets was 27.9% as of 31 December 2021. On a pro forma enlarged group basis as of 31 December 2021, post-completion of acquisition of ARA Asset Management Limited and its subsidiaries (“ARA Acquisition”), the net gearing has been reduced to 20.4%. 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 March 2021, ESR issued S$200 million (approximately US$148.6 million) NC5 fixed rate perpetual resettable step-up subordinated securities at a distribution rate of 5.65% (“Perpetual Securities NC5 5.65%”) under its US$2.0 billion Multicurrency Debt Issuance Programme (“EMTN Programme”). • In April 2021, the Group entered into a US$400 million (with a US$100 million incremental option) unsecured term loan facility which consists of a three-year tranche of US$267 million at Libor plus 2.75% and a fiveyear tranche of US$133 million at Libor plus 3.25%. There were 10 banks participating in the new facility which included both international and Asian financial institutions. • In June 2021, ESR issued a further tranche within the Perpetual Securities NC5 5.65% amounting to S$150 million (approximately US$111.6 million), bringing the aggregate total amount to S$350 million (approximately US$260.2 million). • In November 2021, the Group closed its first Sustainability-Linked Loan (“SLL”) of US$700 million which was subsequently upsized to US$1 billion, at Libor+2.25% and Libor +2.75% for 3-year and 5-year tranches respectively. The loan has a tiered incentive mechanism whereas ESR will be entitled to an interest Debt Maturity Profile of Borrowings As at 31 December 2021 (US$ million) Within one year In the second year In the third to fifth year, inclusive Beyond five years 1,313 31% 46% 16% 7% 1,968 671 295 Note: 1 Includes dividends. R E A C H I N G N E W H E I G H T S 20 ESR STANDALONE FY2021 STRATEGIC REPORT
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