BY Richard Summerfield
Blackstone Group has agreed to sell its portfolio of warehouse and logistics assets in Australia to ESR Cayman Ltd in a deal worth $2.9bn.
ESR, a Hong Kong-listed property manager, has partnered with Singaporean sovereign wealth fund GIC Pte Ltd to acquire the portfolio. GIC will contribute 80 percent of the required equity for the deal, with ESR providing the rest. The portfolio consists of 45 assets held by Blackstone’s Milestone Logistics across major cities including Adelaide, Brisbane, Melbourne, Perth and Sydney, covering a total land area of 3.6 million square metres.
The deal, which is expected to provide an initial yield of 4.5 percent with a 6.9-year weighted average lease expiry, is the largest logistics and general property portfolio transaction in Australia to date. Upon completion, ESR will be the third-biggest logistics landlord in the country with assets under management increasing to A$7.9bn.
The potential sale of the portfolio has been under discussion for some time. In January, Blackstone received more than 10 first-round bids for Milestone Logistics. The firm also considered an initial public offering (IPO) for the portfolio.
“The opportunity to secure such a large portfolio with extremely well-located assets across Adelaide, Brisbane, Melbourne, Perth and Sydney, strategically positions EMP to benefit from the continued growth in demand for warehouse space, particularly as the robust demand for logistics real estate is expected to remain strong due to sustained growth in e-commerce,” said Phil Pearce, chief executive of ESR Australia.
“We are extremely pleased to deepen our partnership with GIC with this momentous transaction,” said Jeffrey Shen and Stuart Gibson, co-founders and group co-chief executives of ESG. “The acquisition of the Milestone portfolio is a significant leap forward for ESR. This tremendous expansion not only adds immediate scale to our presence in Australia and the region, but also extends our footprint and reaffirms our commitment to one of our highest conviction markets in Asia Pacific.”
GIC and ESR are no strangers to one another. In December 2020, the firms announced a strategic partnership to establish a $750m joint venture to develop and acquire industrial and logistics assets in India.
News: ESR, GIC to buy Australian logistics property portfolio from Blackstone for $2.9 bln