The Blackstone Group logo is seen displayed on a smartphone.
Rafael Henrique/SOPA Images/LightRocket via Getty Images
Singapore’s sovereign wealth fund GIC is joining with logistics real estate firm ESR Cayman to buy Blackstone’s portfolio of logistics properties in Australia for about A$3.8 billion ($2.9 billion), in a sign demand for warehouse facilities is growing amid an e-commerce boom fuelled by the Covid-19 pandemic.
Hong Kong-listed ESR said it has formed EMP, an investment vehicle jointly owned with GIC, to bankroll this transaction. ESR will contribute 20% equity in this investment vehicle, while the rest will come from the Singaporean sovereign wealth fund.
The properties comprise 45 warehouse and logistics assets held by Blackstone’s Milestone Portfolio across Australia’s major capital cities, ESR said. The properties with a gross leasable space of 1.4 million square meters sit on a total land area of 3.6 million square meters, providing significant potential for future expansion and development, it added.
With the properties located across Adelaide, Brisbane, Melbourne, Perth and Sydney, EMP will benefit from the continued growth in demand for warehouse space in these cities. “The robust demand for logistics real estate is expected to remain strong due to sustained growth in e-commerce,” said Phil Pearce, CEO of ESR Australia.
The deal will also strengthen ESR’s position as the third-largest logistics landlord in Australia with assets under management of about A$7.9 billion, the company said.
The transaction is subject to the approval of Australia’s Foreign Investment Review Board and will be funded by loans from Australia and New Zealand Banking Group Ltd, MUFG Bank, Ltd., Standard Chartered Bank and United Overseas Bank Ltd.
The properties, which count Woolworths, Daimler Chrysler and Mazda among its tenants, are expected to provide an initial yield of 4.5 percent with a weighted average lease expiry of 6.9 years.
ESR and GIC emerged as the winning bidder for the much-coveted assets following a highly competitive sale process that commenced in January this year with more than 10 bidders in the first round that was subsequently reduced to five parties, ESR said.
