ESR and Singapore’s sovereign wealth fund GIC have established a new partnership to acquire Australia’s Milestone Logistics from Blackstone for A$3.8bn (€2.5bn).
GIC will provide 80% of the equity for the newly created ESR Milestone Partnership (EMP) to fund the purchase of the 45 assets with ESR funding the remaining 20%. The deal represents the largest logistics portfolio transaction in Australia to date.
Contenders for the portfolio included a joint bid from AXA Investment Management and Logos and separate bids from Dexus and Singapore’s Mapletree.
Philip Pearce, ESR Australia’s CEO, told IPE Real Assets that the contest was tight. “There were three bids which were very close to ours,” he said.
JLL’s Head of capital markets, industrial and logistics - Australia, Tony Iuliano, said there were 54 groups in the data room – “a combination of sovereign wealth funds, pension funds, REITs and life insurance groups, totalling $45bn on of capital”.
Pearce said the average site coverage of the portfolio was “only 38%” compared to typical coverage of between 50% and 60% in logistics facilities. “So there is a lot of development potential in the portfolio.”
The acquisition had doubled the size of existing ESR Australian operations, he said. “We will need additional headcounts and we will pick up Milestone’s staff.”
Pearce described the acquisition as transformative, providing ESR Australia with immediate scale and making it the third-largest owner of logistics real estate in Australia, with assets under management of A$7.9bn.
Aside from joint ventures with ESR in China, Japan, Korea and India, the EMP venture is GIC’s third venture with ESR in Australia. It is invested in two other ESR funds set up in the past two years.
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