MESSAGE FROM CHAIRMAN As an enlarged Group, pro forma total AUM4 reached a record US$140.2 billion, up 21% y-o-y. New Economy AUM, accounting for 54% of total AUM5, reached US$59 billion, making ESR the largest New Economy real estate platform in APAC. Pro forma revenue (excluding construction revenue) was US$766.9 million, up 112.7% from ESR’s FY2021 standalone revenue of US$360.6 million. Pro forma Segmental EBITDA increased 56.6% to US$1,216.8 million. Pro forma Fund Management EBITDA surged 195.6% to US$588.2 million and pro forma Total PATMI grew 74.6% to US$658.6 million. Development activities for the enlarged Group were also strong. Our development workbook had a pipeline of 24.3 million sqm as well as WIP of US$10.5 billion6, the largest in APAC. High occupancy rates (ESR: 94%; LOGOS: 95%) and record leasing (4.3 million sqm of space) led us to commence a record amount of development starts as an enlarged Group (US$5.4 billion). The acquisition has also significantly expanded ESR Group’s network of bluechip capital partners. The enlarged ESR Group has active relationships with ten of the world’s top 20 capital partners, representing more than 40% of global real estate allocations7. Backed by such strong relationships with capital partners, fundraising momentum was outstanding across the Group. The enlarged Group raised a record US$13.2 billion in new capital mandates. Uncalled capital for our New Economy business amounted to US$9.8 billion, placing the Group in a very strong position to fund new logistics and data centre developments going forward. The ESR Group also has a “re-equitised” balance sheet with low net gearing (~20%), robust liquidity (US$1.9 billion in cash) and a lower average cost of funding (3.8%). Expanded scale and opportunities By combining ARA’s emerging New Economy and diversified business with our industry-leading New Economy platform under a unified ESR brand, we are uniquely positioned to capitalise on tremendous opportunities in APAC driven by key secular trends such as the continued rise of e-commerce, digital transformation and the emerging growth of the REIT sector. According to JLL, ESR’s total addressable market is set to potentially triple to US$2.5 trillion across the region’s most promising growth sectors of logistics, data centres and public REITS. The logistics sector, supported by the continued rise of e-commerce and supply chain localisation (including higher levels of local inventory), is projected to grow by up to 3.4 times by 2030 to reach US$1 trillion, while data centres will increase by up to 3.9 times to reach US$150 billion. By offering a full suite of both public and private investment solutions to leading global investors, ESR has created the only fully integrated, closed-loop-solutions ecosystem for real estate in the world. Leveraging the REITs and private funds from ARA on the commercial side, our platform allows global capital partners to divest Grade A commercial real estate assets and redeploy the capital back into New Economy real estate via ESR and LOGOS. Moreover, global investors are increasingly consolidating their relationships towards a smaller number of large-scale managers with diversified capabilities and strong track records. Against this backdrop, ESR – leveraging the expanded scale and offerings of its enlarged platform to deliver unique “one-of-a-kind” integrated solutions – is in a prime position to capitalise on this outsized growth. Digital infrastructure for the New Economy In an era of rapid digitisation, data centres are playing increasingly critical roles in the New Economy and investment interest in this new asset class is rising fast. By leveraging our core competitive advantage of bestin-class land sourcing, design and construction, ESR is well positioned to deliver critical digital infrastructure for operators and hyperscalers. Over the past 18-24 months, we have focused on ramping up our data centre team and portfolio as well as our pipeline across the region. Now that we have brought together LOGOS to form APAC’s largest New Economy real estate platform, we will leverage our combined data centre pipeline of over 1,200MW of capacity across the region to accelerate the rollout of our data centre strategy with more expansive offerings and capitalise on the market’s enormous growth. We look forward to raising our inaugural data centre funds in 2022. Sustainability is an important consideration for data centre investors and operators. With ESG at the heart of everything we do, we continue to integrate sustainability elements and responsible low-carbon innovation into our assets, including our data centres, to ensure that they operate at maximum energy efficiency with as minimal an environmental impact as possible. Growth of an industry-leading REIT platform The REIT sector is set to take off across APAC, where JLL projects it will grow up to 3.2 times over the remainder of the decade to reach US$1.3 trillion. As the largest sponsor and manager of REITs in APAC, we believe there are ample opportunities for us to create new REITs across our markets in APAC as well as enhance and grow our existing REITs. In fact, we look forward to completing the proposed merger of ESR-REIT and ARA LOGOS Logistics Trust (“ALOG”), one of the initial value-enhancing steps post the ARA acquisition. We’re very pleased that the unitholders of ESR-REIT and ALOG have approved the Notes: 4 Includes the AUM of associates (Cromwell and Kenedix) as of 31 December 2021. 5 AUM excluding associates. 6 Based on assets on balance sheet and portfolio assets held in the funds and investment vehicles as of 31 December 2021. The total development cost of Moorebank is estimated to be ~US$2 billion. For conservatism, only the first phase (US$1.1 billion) is included in the development starts and WIP. 7 Global real estate allocation by Top 20 LPs since 2011 (JLL Independent Market Research, Preqin). R E A C H I N G N E W H E I G H T S 38 CORPORATE GOVERNANCE
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