Singapore’s GIC has invested A$400m (€245m) with pan-Asian logistics group ESR to develop assets in Australia through a new vehicle.
The newly-launched ESR Australia Development Partnership (EADP) vehicle – with a target fund size of A$1bn – will be seeded with two prime land parcels, both located in Sydney’s west, to be developed and held by the fund.
This is GIC’s second commitment to the Australian logistics market. In March, it invested A$450m in a separate vehicle, ESR Australia Logistics Partnership (EALP), to acquire income-producing assets.
ESR would initially had a 60% stake in the latest partnership, but it intends to sell down its interest to other investors.
Eventually, it expects to hold a 20% interest in EADP, like it does in EALP.
The two partnerships provide ESR Australia with the capacity to acquire and develop more than A$3.5bn of logistics assets.
Philip Pearce, ESR Australia’s chief executive, told IPE Real Assets: “Compared to other asset classes, logistics has the most attractive outlook. It has performed better than other sectors.”
Pearce said the Australian market for good logistics assets had become highly competitive, with demand coming from both specialist logistics players and diversified groups.
“We are still able to compete in this market,” he said. “Our advantage is that we have a single focus just on logistics.”
ESR Australia has built up a land bank over the past 12 months. The two sites, to be sold into the new EADP for A$190m, are currently part of ESR Australia’s land bank.
End-value of the completed facilities will be approximately A$410m.
Pearce said future opportunities would include a 30-hectare site in Kemps Creek, another suburb in Sydney’s west, which was recently rezoned from agricultural to industrial.
“We have identified other sites, and we are doing due diligence on a number of these sites,” he added.
When EADP reached its billion-dollar capacity, it was likely that GIC could upside its initial investment and/or ESR could bring in new investors, Pearce said.
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