GIC has stumped up US$480 million in capital for yet another joint investment platform in real estate with ESR, cementing the ties between the Singaporean sovereign wealth fund and the Hong Kong-listed Asian real estate manager.
The latest platform will look to acquire US$600 million of income-producing core industrial and logistics assets in India, with GIC contributing 80% of the capital and ESR 20%. The Core JV represents an extension of the existing partnership in India between the two, which was initiated in 2020 with a commitment of US$750 million and the same 80:20 split. The partners are anticipating a surge in demand for logistics and industrial real estate, fuelled by India’s e-commerce growth and expanding industrial base.
The deal comes just weeks after GIC injected US$319 million into the ESR Australia Development Partnership II (EADP II), the successor to the fully-allocated ESR Australia Development Partnership (EADP I), which was established in June 2020. GIC is now the single-largest capital partner of ESR Australia, having participated in several ESR funds, including ESR Logistics Partnership III, with an equity commitment of US$365 million. In 2021, it partnered ESR in its acquisition of the US$2.4 billion ESR Milestone Logistics Portfolio from Blackstone.
State-owned investors (SOIs) forge joint ventures in real estate to create large asset pools in partnership with a leading investor in the sector, who originates deals backed by the capital. This may be preferable in entering a market segment or region where a sovereign fund lacks in-house capacity and experience and where partners have a proven track-record of delivering superior yields. Canadian public pension funds along with GIC and Dutch public pension fund managers APG and PGGM have been the most enthusiastic investors in joint venture real estate partnership – and ESR is their favored partner in the Asian real estate market, particularly in the logistics segment.
This year, ESR became the Asia-Pacific region’s largest real asset manager and the third largest listed real estate investment manager globally with a gross AUM of US$140 billion, following its acquisition of ARA Asset Management, including its subsidiary LOGOS, in a US$5.2 billion transaction. SOIs have pledged an estimated US$3 billion in LOGOS joint venture platforms, with a further US$8.7 billion committed to ESR platforms.
Altogether, GIC has committed around US$5 billion to ESR/LOGOS platforms, followed by CPP Investments (US$2.7 billion) and APG (US$1.8 billion). ADIA, Bouwinvest, AustralianSuper, CDPQ, Mubadala, PGGM and TCorp have also together committed a total of US$2.3 billion.