E-Shang Redwood (ESR) has acquired a majority stake in the manager of the Singapore-listed Cambridge Industrial REIT (CIT) for an undisclosed price.
The acquisition gives ESR, partly owned by private equity firm Warburg Pincus, a platform to expand in Southeast Asia.
Warburg Pincus, co-founder of e-Shang with two Chinese real estate entrepreneurs, is reportedly also making a joint pitch with Blackstone for the Singapore-listed Global Logistic Properties.
Jeffrey Perlman, head of Southeast Asia and managing director of Warburg Pincus, said the firm had noted an undersupply of modern logistics facilities in the region.
He added that Warburg Pincus was likely to become “the largest logistics private equity investor in Asia”.
Cambridge REIT informed the Singapore Exchange that the two majority shareholders of its management company, Cambridge Industrial Trust Management (CITM), have agreed to sell their combined 80% stake to ESR.
Shareholder nabInvest, a wholly owned subsidiary of National Australia Bank, held a 56% stake; CREIM and Japan’s Mitsui also hold stakes.
The latest deal comes after a move by ESR in October to enter into an option agreement to buy up to 10.65% of units in CIT from three existing unit-holders.
Upon completion of acquisition, ESR will become the second-largest shareholder of CIT, the management company said in a statement.
The co-chief executive of ESR, Jeffrey Shen and Stuart Gibson, said the investment underscored their confidence in the underlying fundamentals and quality of CIT’s portfolio of assets.
Ooi Eng Peng, independent chairman of CITM, said CIT had grown from 27 assets worth SGD500m (€329m) during its IPO to 49 assets worth SGD1.4bn and would now be much better positioned to grow to the next level, with ESR as major shareholder of the manager.
Ooi said the trust could leverage off ESR’s industrial property experience and coverage.
“ESR will be the right shareholder of the manager to transform CIT into a top-tier, Singapore-based, regionally diversified industrial REIT,” he said.
Industry sources in Singapore told IPE Real Estate the market believes ESR could potentially inject some of its $5bn (€4.7bn) portfolio of assets in China, Korea and Japan into CIT.
“This will give it an opportunity to recycle its capital and assets,” said one source. “As well, the relationship will place CIT on a growth path.”
One source said: “The trust will now have some visibility of a pipeline of projects it can acquire in future.”
CIT attempted to expand outside the saturated market of Singapore into Australia but so far has been unsuccessful in closing deals.
In a research note, the DBS REIT team wrote that: “We are positive on this acquisition, as CIT will be transformed from an independent REIT into one that is backed by a sponsor with a larger asset portfolio and a strong pipeline.
“ESR’s strategic strength in modern warehousing will continue to benefit from the rapid growth of e-commerce and Asia.”
ESR was born out of a merger between e-Shang and the Redwood Group last year.