Record capital raising as APAC real estate takes centre stage APAC real estate has taken centre stage, particularly New Economy assets (i.e. logistics and data centres). Powered by the rise of e-commerce, this trend is expected to continue given Asia’s large population, strong domestic consumption and high level of digitalisation. Leading global investors are seeking to rebalance their portfolios towards New Economy real estate, assets that have been meaningfully underweight. Against this backdrop, our Fund Management segment delivered another outstanding performance in 2021. Our fund AUM rose 31% y-o-y to US$35.6 billion. Total AUM hit a record high of US$39.4 billion, up 32% y-o-y. We raised a record US$5.8 billion in committed capital across nine new or upsized funds and mandates. One of the highlights was ESR Milestone Partnership (“EMP”), an A$1.3 billion (approximately US$1.0 billion) investment partnership with long-time capital partner GIC for the A$3.8 billion (approximately US$2.9 billion) Milestone Portfolio acquisition in Australia. This was the country’s largest-ever logistics property transaction, and it also made ESR the third largest logistics and industrial owner in Australia, just three years after entering the market. Our record fundraising performance demonstrates the trust that existing and new investors alike have in ESR’s ability and track record, as well as their growing appetite for APAC logistics real estate. As global investors increasingly seek to consolidate their relationships towards a smaller number of largescale managers with the goal of allocating more capital to them, we will leverage the enlarged ESR Group’s unmatched scale, the breadth of its portfolio and offerings, and, most importantly, its expanded team of experienced and dedicated people to help our capital partners and customers thrive and capitalise on the continued rise of real assets in APAC. Since 2021, ESR is a constituent of the FTSE Global Equity Index Series (Large Cap), Hang Seng Composite Index and MSCI Hong Kong Index, and it has been included in both Shanghai - Hong Kong Stock Connect and Shenzhen - Hong Kong Stock Connect. Setting new benchmarks with bestin-class developments The growth of e-commerce and the resilience of the supply chain have driven customer demand, especially for sophisticated, large-scale distribution centres that enable high operational efficiency and incorporate sustainability features. This is what ESR is renowned for: building bestin-class logistics facilities and data centres across major regional hubs and metropolitan areas. We have been leveraging this trend by focusing our efforts on developments that are larger in terms of both scale and value, which resulted in significant expansion in this area in 2021. Major projects included the 340,000 sqm ESR Shanghai Qingpu Yurun Phase I, a high-standard logistics facility with cold storage space; and the 195,998 sqm ESR Yokohama Sachiura Distribution Centre 1, which forms part of the largest multiphase logistics park in Japan at approximately 800,000 sqm over four phases. Leasing activities and rental performance were also strong. We achieved an improved occupancy rate of 94%1 across the portfolio and record leasing of over 3.3 million sqm of space. 82% of the new leases were led by e-commerce and 3PL customers. Among ESR’s top 10 tenants by income1, nine are e-commerce or 3PL-related. In addition to our core markets of China, Japan, South Korea, Australia and India, where ESR has established a clear leadership position, we see huge potential in Southeast Asia due to favourable demographics, rising income and consumption levels, and booming but unmet demand for modern logistics stocks. In May 2021, ESR entered the Vietnamese market with the launch of a 240,000 sqm development in Binh Duong, a major industrial hub in the south, in partnership with BW Industrial, the country’s leading local logistics and industrial developer and operator. Land scarcity remains a major challenge in many key markets. Therefore, authorities and industry players are both seeking solutions to fulfil the growing demand for logistics space. Very often, such efforts go beyond just building facilities; local community engagement, heritage preservation and environmental stewardship are also instrumental. ESR has an unrivalled track record in planning and executing such projects. For example, we recently announced the development of the ESR Kawanishi Distribution Centre, one of Japan’s largest and most significant urban rezoning projects in recent years that strategically repurposes a prime site for logistics and industrial use. We are proud to be able to make the best use of our experiences and expertise to deliver more than just prime facilities for our customers, the logistics market and the local communities in which we operate. Note: 1 Based on investment properties on balance sheet and portfolio investment properties held in the funds and investment vehicles as of 31 December 2021. E S R C A Y M A N L I M I T E D A N N U A L R E P O R T 2 0 2 1 41
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