New C-REIT focuses on ‘best-in-class’ logistics facilities
Backed by APAC’s largest real estate asset manager, ESR Group’s leading new economy platform has approximately 69 billion US dollars of the new economy AUM and the largest new economy development manual in APAC 13 billion US dollars
ESR Group’s flagship C-REIT further strengthens its leadership as APAC’s largest sponsor and manager of public REITs
Propose ESR C-REIT will be an instrument with a distributable yield above 4%
SHANGHAI And HONG KONG, December 9, 2023 /PRNewswire/ — ESR Group Limited (“ESR” or the “Company”, together with its subsidiaries under the name “Group”; stock code SEHK: 1821), today announced that its application for registration and listing of ESR China REIT (“ESR C-REIT”) has been received by the China Securities Regulatory Commission and the Shanghai Stock Exchange.
The manager of the ESR C-REIT is AVIC Fund, a publicly offered infrastructure securities fund. ESR Group is the sponsor of ESR C-REIT and unitholders of the REIT will benefit from ESR Group’s extensive portfolio of assets under management (“AUM”) and ongoing development work (“WIP”) to provide a pipeline of potential acquisitions. for ESR C-REIT. In ChinaESR Group manages more than 190 assets valued at 30.8 billion US dollars.
ESR Group is APAC’s largest real estate asset manager with approximately 150 billion dollars of assets under management and the largest REIT sponsor and manager in APAC with total assets under management of approximately 45 billion US dollars. The Group is present worldwide in 28 countries. The Group’s leading New Economy platform has approximately 69 billion US dollars of new economy assets under management, including logistics and data center portfolios, and APAC’s largest new economy development playbook 13 billion US dollars.
The ESR C-REIT will focus on new economy logistics, e-commerce and high-tech industrial manufacturing assets in Greater China, all of which are supported by strong secular growth trends. Upon creation, the REIT will include three logistics projects currently wholly owned by the Group through Jiangsu Friend Warehouse Co., Ltd (the “Seed Portfolio”). These projects are all modern facilities with the best specifications and designs and strategically located in Kunshan, Jiangsu Province, China. Kunshan is about 45 minutes from Shanghai and a major hub for the country’s last-mile logistics networks. With a total area of over 426,000 m², Jiangsu Friend Phase I has a gross floor area (“GFA”) of over 135,000 m². Jiangsu Friend Phase II has over 85,000 m² of GFA and Jiangsu Friend Phase III has the largest area of the three phases with a total GFA of over 206,000 m². All three assets have been built since 2018 with an occupancy rate of over 95% over the past four years, anchored by multinational brands in logistics, e-commerce and fast-moving consumer goods. The ESR C-REIT is expected to raise approximately 2.88 billion RMB. Starting in 2024, annualized cash distribution rates are estimated at approximately 4.4% and 4.5%.
China is rapidly expanding its domestic real estate investment trust (C-REIT) regime with the ability to sell portfolios of assets in the public markets, providing new recapitalization options for institutional investors across a growing range of market sectors. According to a UBS report, the C-REIT market could reach 3 trillion US dollars in market capitalization by 2030 if China could securitize only 5 percent of its infrastructure assets valued at 60 trillion US dollars. 1 The C-REIT market would then have eclipsed the US REIT market, whose current market capitalization is 1.4 trillion US dollars to become the largest REIT market in the world. 2
Stuart Gibson And Jeffrey Shenthe co-founders and co-CEOs of ESR Group said: “Today, we are proud to mark a new milestone for the company with the ESR C-REIT project. The C-REIT will further expand the range of public REITs we manage and it opens up a new set of investors to the Group – domestic institutional and retail investors in China. As a leading REIT manager in APAC, we strongly believe in the continued financialization of real estate in APAC and particularly in China. We are delighted to be able to support and be at the forefront of the Chinese government’s plans to enable the securitization of infrastructure projects. The proposed transaction contributes to strengthening our leading position in the new economy real estate market and opens a new and exciting growth engine for the Group by China“.
“Access to alternative forms of capital is important to ESR Group and REITs are seen as an important pillar for capital growth and diversification. The proposed C-REIT allows us to take advantage of the favorable legislative environment in China and potentially opens the door to new markets and opportunities for the Group in the region. Once established, the C-REIT enhances the ESR Group’s capital market options by China and opens a new channel to raise local capital,” said Chang Rui HuaManaging Director of Business Management and Investments of ESR Hong Kong Limited, who is also responsible for the C-REIT initiative.
1 UBS: China Infrastructure: ISP growth above 4% in 2022E
2 National Association of REITS or Nareit
About the ESR
ESR is APAC’s largest real estate asset manager powered by the new economy and the third largest listed real estate investment manager in the world. With approximately 150 billion dollars in terms of assets under management (AUM), our fully integrated investment development and management platform spans across key APAC markets including China, Japan, South Korea, Australia, Singapore, India, New Zealand And South East Asiaaccounting for over 95% of GDP in the APAC region, and also includes a growing presence in Europe and in the United States. We offer a diverse range of real asset investment solutions and new economy real estate development opportunities through our private funds businesses, which enable financial partners and clients to capitalize on the most important secular trends. important companies in the APAC region. ESR is the largest REIT sponsor and manager in the APAC region with total assets under management of approximately 45 billion US dollars. Our purpose – Space and Investment Solutions for a Sustainable Future – drives us to manage sustainably and efficiently and we view the environment and the communities in which we operate as key stakeholders in our business. Listed on the Main Board of the Stock Exchange Hong Kong, ESR is part of the FTSE Global Equity Index Series (Large Cap), Hang Seng Composite Index and MSCI Hong Kong Index. For more information about ESR, please visit www.esr.com
About the AVIC Fund
AVIC Fund Management Co., Ltd. (referred to as “AVIC Fund”), which is the manager of AVIC ESR Warehouse and Logistics Infrastructure REIT, is a national fund management company specializing in China Activities authorized by the Securities Regulatory Commission (CSRC), including fundraising, asset management and public offering of REITs. Approved by the CSRC (license [2016]1249), the AVIC Fund was legally registered on June 16, 2016. AVIC Fund is responsible for formulating and executing the overall strategy of this REIT offering. Committed to creating a distinctive brand in REITs, AVIC Fund currently manages 2 of 29 C-REIT funds, namely AVIC Shougang Green Energy REIT (180801) and AVIC Jingneng Photovoltaic REIT (508096). In addition, the AVIC Fund is actively developing in various sectors, including peak carbon and carbon neutrality, consumption, public housing, culture and tourism, thereby achieving multi-format development. As a domestic fund management company owned by AVIC Industry-Finance Holdings, AVIC Fund has a registered capital of 300 million RMB. Based at Beijing, its business scope includes fundraising, fund sales and asset management, which are licensed by CSRC. The shareholders of AVIC Fund are AVIC Securities Co., Ltd. and Beijing Shougang Fund Co., Ltd.
About the CMS
China Merchants Securities Co., Ltd. (referred to as “CMS”) is the financial advisor to the ESR C-REIT. CMS is an investment bank of China Merchants Group, a Chinese state-owned enterprise with more than 100 years of history. Listed on the continent China And Hong Kong (600999.CH，06099.HK), CMS served as financial advisor for the issuance of 3 C-REITS – Bosera Merchants Shekou Industrial Park REIT, CICC Anhui Traffic Control REIT and AVIC Beijing Energy PV REIT. CMS will continue to support the listing of the ESR C-REIT with its professional service.
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SOURCE ESR Group
