ESR-REIT has obtained a $A68.5 million unsecured loan to finance the acquisition of a 10 per cent interest in an Australian logistics investment.
The investment, ESR Australia Logistics Partnership, indirectly holds 33 income-producing properties, two properties currently under development and two land parcels for future development.
Valuation reports stated the total market value of the 32 incoming producing properties was $A1,030.60 million.
Singapore sovereign wealth fund GIC holds an 80 per cent stake in the fund, while ESR Queensland Hold Trust own the remaining 20 per cent.
The fund’s portfolio comprises properties in New South Wales, Victoria, Queensland, South Australia and Western Australia – a total land area of about 1.3 million sqm, an occupancy rate of 95.9 per cent and a weighted average lease expiry of 4.87 years as at March 31.
The $A64.9 million acquisition includes the $A60.5 million purchase price and $A2.5 million in fees to be incurred in connection with the deal.
ESR Queensland Hold Trust entered into a unit sale agreement with the trustee of ESR-REIT to sell 10 per cent of ESR Australia Logistics Partnership, with the acquisition expected to be completed in May 2021.
The Trustee commissioned independent valuers from Knight Frank CBRE, with an independent valuer from Colliers also appointed by the manager.
ESR-REIT said it’s maiden overseas acquisition provides geographical diversification and fits with the manager’s strategy to invest in markets where the sponsor has real estate operational capabilities and presence.
“ESR-REIT’s exposure to Australia post-Acquisition is expected to be 2.3 per cent by rental income as at 31 March 2021,” the statement read.
“This provides geographical diversification to ESRREIT’s portfolio, and an exposure to an established economic market, thereby reducing ESR-REIT’s current concentration risk due to its 100 per cent exposure to the Singapore economy.”
The investment trust said it also provides an opportunity to capitalise on Australia’s attractive logistics market, citing independent market research report issued by Colliers.
“Despite the outbreak of COVID-19, the industrial and logistics sector in Australia has outperformed all other mainstream real estate sectors,” the statement read.
“Driven by infrastructure investments and e-commerce growth, fundamentals of the industrial and logistics sector in Australia remains favourable.
“Key market drivers (including infrastructure investment and e-commerce growth) are expected to remain strong and will continue to be a positive influence onindustrial occupancy and investor demand. Additionally, occupiers in e-commerce, food logistics, pharmaceutical, transport and logistics sectors have perform.”
ESR Australia chief executive Phil Pearce described the acquisition as transformative, providing immediate scale and making ESR the third largest owner of logistics real estate in Australia.
“[The opportunity] strategically positions EMP to benefit from the continued growth in demand for warehouse space, particularly as the robust demand for logistics real estate is expected to remain strong due to sustained growth in e-commerce,” he said.
“The portfolio is land rich, with low site coverage of only 38 per cent providing plenty of opportunity for ESR Australia to redevelop these assets over time.”