ESR-LOGOS Funds Management (S) Limited, the manager of ESR-LOGOS REIT, has announced two significant acquisitions aimed at enhancing its New Economy portfolio. These acquisitions, valued at approximately S$772.6 million, include a 100% interest in the ESR Yatomi Kisosaki Distribution Centre in Nagoya, Japan, and a 51% stake in a high-specifications manufacturing facility at 20 Tuas South Avenue 14 in Singapore.
Strategic Rationale and Impact
The acquisitions align with ESR-LOGOS REIT’s “4R Strategy,” focusing on rejuvenating its asset portfolio, recapitalizing for growth, recycling capital, and reinforcing its sponsor’s commitment. The integration of these high-quality assets is expected to be accretive to Distribution Per Unit (DPU) by 1.8%, reflecting a pro forma DPU increase from 2.564 cents to 2.609 cents for FY2023.
Adrian Chui, CEO and Executive Director of ESR-LOGOS Funds Management, stated, “These acquisitions mark a pivotal step in our growth strategy, enhancing our New Economy portfolio and extending our underlying land leases. This strategic move not only aligns with our long-term vision but also reinforces our commitment to sustainability and future-proofing our portfolio.”
Details of Acquisitions
ESR Yatomi Kisosaki Distribution Centre, Nagoya, Japan
The ESR Yatomi Kisosaki Distribution Centre is a modern, four-storey logistics facility situated in Nagoya, Japan. The facility spans 79,096 square meters and boasts a CASBEE A Sustainability Rating, reflecting its high environmental standards. With an occupancy rate of 89.4% and a Weighted Average Lease Expiry (WALE) of 2.71 years, the facility is strategically located with excellent connectivity to key logistics hubs, including the Nagoya Container Terminal and Ise-Wangan Expressway.
This acquisition increases ESR-LOGOS REIT’s exposure to the Japanese logistics market, boosting its presence from 3.7% to 8.9%. The acquisition price of JPY38,681 million (approximately S$328.0 million) represents a 2.3% discount to its average valuation, offering an attractive Net Property Income (NPI) yield of 4.0%.
20 Tuas South Avenue 14, Singapore
Located near Singapore’s Tuas Mega Port, the 20 Tuas South Avenue 14 facility comprises a high-specifications manufacturing facility and modern ramp-up logistics warehouses. With an occupancy rate of 99.7% and a WALE of 11.2 years, this asset is strategically positioned to capitalize on the growth of Singapore’s logistics and industrial sectors.
The acquisition price of S$444.6 million represents a 2.3% discount to its average valuation, providing an NPI yield of 6.1%. The facility is Green Mark Platinum certified, underlining ESR-LOGOS REIT’s commitment to sustainability.
Financing and Sponsor Support
The acquisitions will be funded through a combination of green debt financing and proceeds from a preferential offering of new units, fully underwritten by the ESR Group. The Sponsor has committed to subscribe to S$140.0 million of the offering at a premium to the market price, further demonstrating its strong support and belief in the REIT’s growth strategy.
These strategic acquisitions not only enhance ESR-LOGOS REIT’s portfolio metrics, including extending the underlying land lease and improving WALE, but also reaffirm the Sponsor’s commitment to growing ESR-LOGOS REIT into a leading New Economy REIT in the Asia Pacific region. With these additions, ESR-LOGOS REIT continues to strengthen its position as a future-ready, sustainability-focused investment vehicle in key gateway markets across Asia.
