An affiliate of Starwood Capital Group, a global private investment firm focused on real estate, has agreed to acquire a 10.7% equity stake in ESR Group in a structured transaction alongside ESR co-founders, Stuart Gibson and Charles de Portes.
Gibson will remain co-chief executive officer (CEO) and an executive director of the company and Portes will remain a non-executive director at the Hong Kong Stock Exchange (HKEX) listed firm, according to a March 20 media release.
ESR Group is Asia Pacific’s (Apac) largest real asset manager with approximately $156 billion in total assets under management focused on the new economy sectors of logistics, data centres and alternatives.
The company, which has an office in Two Exchange Square (pictured) in Hong Kong, has an integrated development and investment management platform across Apac markets including Australia, Japan, South Korea, China, Southeast Asia (SEA) and India.
Barry Sternlicht, chairman and CEO of Starwood Capital, said in a statement: “ESR is the leading real estate platform in Apac with important market positions in logistics and data centres, which are key growth areas for Starwood Capital. I have known Stuart for many years and have always been impressed by the business he, Charles and co-CEO Jeffrey Shen have built.”
He added: “Having recently partnered with ESR in Australia, we are very pleased to expand and strengthen our relationship through this transaction. We have full faith and confidence in the management team and look forward to working with all stakeholders over the longer-term.”
Gibson added: “I have known Barry for nearly 20 years and I look forward to partnering with Starwood Capital as an investor. We believe Starwood Capital’s support will allow ESR to continue to focus on delivering for our customers, shareholders and capital partners.”
Pursuant to the acquisition, all of the outstanding sums under the existing margin loan facility of the holding vehicle of the co-founders will be fully extinguished, the statement said.
On March 21 the firm announced its FY 2023 results for the year ending December 31, 2023. Assets uner management grew by 7.3% to $156.1 billion while earnings before interest, tax depreciation and amortisation (EBITDA) fell 23.1% to $885 million.
In Q1 2024 the group said it raised approximately $1 billion. This includes the group’s first perpetual, open-ended logistics core fund in South Korea, holding an initial portfolio of seven high quality class A logistics warehouses worth around $2 billion.
Green loan
In November 2023, ESR and property developer Chinachem Group closed Hong Kong’s first-ever green loan for the development of a logistics centre. The HK$8.8 billion ($1.13 billion) green loan was one of the largest in Hong Kong in 2023 and it will be used to finance the construction of Kwai Chung Cold Storage Logistics Centre, Hong Kong’s largest cold storage facility ever to be built in the last 20 years.
The five-year loan was in alignment with the Green Loan Principles issued by the Loan Market Association, Asia Pacific Loan Market Association and Loan Syndications & Trading Association. The Green Loan Principles focus on the following four core components: use of proceeds; process for project evaluation and selection; management of proceeds; and reporting.
Sumitomo Mitsui Banking Corporation, United Overseas Bank and Oversea-Chinese Banking Corporation acted as mandated lead arrangers, bookrunners and underwriters and green loan coordinators. Industrial and Commercial Bank of China (Asia) (ICBC Asia), The Bank of East Asia, (BEA), and The Bank of East Asia, Singapore branch, acted as mandated lead arrangers and bookrunners. Other mandated lead arrangers included China CITIC Bank International.
Allen & Overy acted as the lead counsel to ESR and Chinachem Group and Mayer Brown acted as the lead counsel to the lenders.
