ESR Australia is paying $3.8 billion – the highest price outlaid in one line for a collection of Australian property assets – for the Blackstone Milestone logistics portfolio and managing business, Milestone Operations Limited (MOP).
The deal is subject to Foreign Investment Review Board approval.
The 45 investments cover 360 hectares and contain more than 1.4 million square metres of gross lettable area.
They will be held in a new vehicle, ESR Milestone Portfolio (EMP) – 80 per cent of which will be owned by Singapore sovereign wealth fund GIC.
Post transaction, ESR Australia will control $7.9b of local industrial real estate – making it the country’s third biggest manager of this product.
Blackstone was, since 2016, the nation’s fifth largest owner.
ESR Group, which was Main Board listed in late 2019, is the most sizeable logistics real estate manager in the Asia Pacific – its assets, covering 2010ha, worth $38.7b (US$29.9b).
ESR Milestone Portfolio
ESR Australia outbid Dexus, Mapletree, and a partnership comprising LOGOS and AXA Investment Managers for the Blackstone assets.
ANZ Banking Group, Mitsubishi UFJ Financial Group, Standard Chartered and United Overseas Bank will underwrite the debt.
The properties are in Sydney, Melbourne, Brisbane, Perth and Adelaide (story continues below).
The blended yield is 4.5pc.
Low site coverage
ESR Australia chief executive officer Phil Pearce said the “transformative” deal 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 sales”.
Australia Post, Caterpillar, Daimler Benz, Mazda, Toll and Woolworths are amongst the occupiers.
“The portfolio is land rich, with low site coverage of only 38pc, providing plenty of scope for ESR Australia to redevelop these assets over time,” the leader added.
Colleagues, co-founder and co-CEO, Jeffrey Shen and Stuart Gibson, said “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”.
In another landmark deal, in February, LOGOS agreed to pay Qube $1.65b for the 243-hectare Moorebank Business Park, investment-holding Qube Moorebank Warehouse Trust, and stakes in related businesses .
Six years ago, Ascendas Reit spent $1.1b on 26 assets – held by Frasers Property Australia and, coincidentally, GIC.
In 2016, Blackstone paid Goodman $640m for assets which are now selling to ESR. Sources say the same vendor is presently close to selling a Manulife-led partnership 20 east coast logistics properties for c$850m.
More to come.