APG, CPPIB, and ESR Form $1 Billion Korean Logistics Platform

Posted on 04/23/2020

Where else can large public institutional investors go during a worldwide viral outbreak? With the rise of e-commerce, public investors are opting for e-commerce-linked logistical properties. For Canada Pension Plan Investment Board (CPP Investments), Asia’s consumer sector has been one of its key investment themes.

APG Asset Management (manages Stichting Pensioenfonds ABP), CPP Investments, and listed company ESR Cayman Limited formed a new development joint venture, ESR-KS II with a total equity allocation of US$1 billion, representing an investment capacity to deliver as much as US$2 billion of new development projects. APG, CPP Investments, and ESR have agreed to initial investments in the Joint Venture in the amounts of US$ 350 million, US$ 450 million, and US$ 200 million, respectively. The partners have allocation expansion options that could bring the total equity investment capacity to as much as US$ 2 billion over time. APG, CPP Investments, and ESR will hold 35%, 45% and 20%, respectively, of the total issued shares of the joint venture.

This joint venture will invest in and develop industrial and warehouse logistics portfolio in the Seoul and Busan metropolitan areas, the two markets with the largest populations and highest consumer spending in South Korea. The transaction is expected to close before July 2020, subject to relevant regulatory approvals.

Historical Relationships

The new joint venture marks APG’s fourth development collaboration with ESR, and CPP Investments’ third joint venture with ESR. It is a successor vehicle to a US$1 billion joint venture, which was later upsized to US$ 1.15 billion – between the three parties that has led to the development of 17 projects totaling 2.2 million square meters of gross floor area in South Korea.

e-Shang Redwood (ESR) is the largest APAC focused logistics real estate platform by gross floor area (GFA) and by value of the assets owned directly and by the funds and investment vehicles it manages.

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