ESR IR 2021 - EN

12 STEP FORWARD Management Discussion and Analysis BUSINESS REVIEW During the six months ended 30 June 2021 (“ 1H2021 ”), ESR continued its strong momentum and delivered outstanding performance. The Group’s three pillars of business — investment, fund management and development — remained robust and delivered exceptional growth. The COVID-19 pandemic continues to accelerate the growth of e-commerce where ESR sits at the heart of the central nervous system delivering the core New Economy infrastructure to its best-in-class clients. ESR’s strong financial results and operational excellence have demonstrated not only the Group’s resilience, but also the strength and power of its business model. Revenue (excluding construction revenue) for 1H2021 was US$177.7 million, up 24.7% from US$142.4 million in 1H2020. EBITDA increased by 38.6% from US$269.4 million in 1H2020 to US$373.5 million in 1H2021. Fund Management EBITDA recorded accelerating growth with a 50.9% year-on-year increase from US$64.4 million in 1H2020 to US$97.1 million in 1H2021. Net profit attributable to the owners of the Company (“ PATMI ”) grew 60.9% from US$133.0 million in 1H2020 to US$213.9 million in 1H2021. Higher PATMI was driven by the growth in the Group’s co-investments in funds, associates, and joint ventures, as well as lower borrowing costs. This is in line with ESR’s asset light strategy and disciplined capital management. Having witnessed sustained strong capital inflows and leasing demand, the logistics market has solidified its position as the preferred real estate asset class in Asia. It is expected that e-commerce acceleration and supply chain transformation will continue to benefit ESR as it extends the platform deeper into existing markets as well as new markets over the next 12 months. Accelerating growth of Fund Management segment ESR’s Fund Management segment achieved stellar performance in 1H2021 with revenue surging 48.2% to US$123.9 million, buoyed by various key drivers including: the continued growth in the Group’s fund AUM which rose 37.9% year-on-year to US$32.7 billion; the robust development work-in-progress (“ WIP ”) (in funds) which reached a record US$5.5 billion; and strong leasing activity with over 1.6 million sqm of space leased across portfolio. Supported by its well-established fund management platform, together with the continued acceleration in fundraising momentum, the Group’s total AUM continued to grow, reaching US$36.3 billion, up 36.9% year-on-year. The Group continues to see strong capital flows into logistics as global institutional investors are seeking to strategically rebalance their portfolios. Underpinned by the strong capital partner relationships and track record ESR has built over the years, the Group raised US$2.5 billion in committed capital via new and/or upsized vehicles across Japan, South Korea and Australia. • JPY75 billion (approximately US$675 million) expansion of ESR Japan Logistics Fund III (“ RJLF3 ”) with APG and another global institutional investor; • US$500 million upsized investment with CPP Investments in the Korea Income Joint Venture; and • A$1.3 billion (approximately US$1.0 billion) investment partnership with GIC for a newly formed investment vehicle, EMP, for the Milestone Portfolio acquisition in Australia. The A$3.8 billion (approximately US$2.9 billion) acquisition of the Milestone Portfolio and its management platform, which was completed in June 2021, marks the largest-ever logistics property transaction in Australia. The acquisition represents an 80% uplift in ESR Australia’s AUM, which is now valued at US$6.1 billion, and positions ESR as the third largest logistics and industrial owner in the country, within three years of entering the Australian market. Fundraising momentum remains strong as the Group continues to deepen its relationships with new and existing capital partners. As of 30 June 2021, the Group had over US$4.4 billion worth of committed but uncalled capital to invest in new projects going forward.