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ESR and partners form $1 bn JV to invest in South Korea logistics assets

The partners include Dutch pension administrator APG and Canada Pension Plan Investment Board

Hong Kong-based logistics real estate company ESR Cayman formed a $1 billion joint venture with Dutch pension administrator APG and Canada Pension Plan Investment Board (CPP Investment), the media reported.

The new entity, which is called ESR-KS II, will invest in the South Korean logistics real estate market.

According to media reports, ESR Cayman, APG, and CPP Investment will invest $200 million, $350 million, and $450 million respectively.

The joint venture will primarily focus on developing industrial and warehousing logistics portfolio in Korean cities such as Busan and its capital, Seoul.

While ESR Cayman owns a 20 percent stake in the joint venture, APG owns 35 percent, and the remaining 45 percent is owned by CPP Investment.

“This will allow us to capture the next wave of growth and opportunity in a sector that even in these uncertain times is demonstrating resilience,” said Graeme Torre, head of Real Estate at APG Asset Management Asia.

According to CPP Investment, the continued growth of South Korea’s ecommerce market is driving the demand for quality logistics facilities.

ESR-KS II predecessor led to the development of 17 projects covering 2.2 million square meters of gross floor area in the country. The $1 billion joint venture called ESR-KS was later upsized to $1.5 billion.

Earlier this month, ESR Cayman reported a 40.6 percent rise in revenue for 2019 to $357 million. Its net profit climbed 20.8 percent to $245 million.

Amid the coronavirus pandemic, the ecommerce sector is expected to grow further. This will subsequently increase the demand for logistics facilities such as warehouses.

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