A deal worth US$5.22bn creates the world's 3rd largest real estate manager
ESR Cayman Limited andARA Asset Management announced that the two companies have entered into an acquisition agreement pursuant to which ESR will acquire 100% of the share capital of ARA for US$5.2 billion.
Founded in 2002 and listed on the SGX between 2007-2017, ARA is the largest real asset manager in APAC with a captive and fast growing New Economy real estate platform via its subsidiary, LOGOS. WithUS$95 billionin gross AUM, ARA operates a diversified multi-product platform across assets, strategies and geographies in both the public and private markets, covering real estate investment trusts (REITs) and private funds in real estate, infrastructure / renewables and credit.
ARA executes its market leading platform under its "Raise, Invest, Manage and Build" strategy. Group-wide, it has raised overUS$16 billionin equity capital since 2016, which has supported a gross transaction volume of acquisitions, divestments and development activity of almostUS$20 billionduring the same period.
Utilising an investor-operator model to manage its investments and to add value at every stage of an asset's life cycle, ARA has built a demonstrable track record over time in growing its business and ultimately delivering value for all its stakeholders.
As a key part of its growth engine, ARA currently owns a controlling stake in LOGOS, a leading logistics and data centre real estate developer and fund manager with a strong presence acrossAustralia,China,Singapore,Indonesia,Malaysia,Vietnam,India, Korea andNew Zealand.
On the back of its continued expansion across APAC, LOGOS' total AUM has nearly doubled over the past two years toUS$17 billion, comprising over 8.9 million sqm of property either owned or under development across 26 ventures, including theSingaporelisted ARA LOGOS Logistics Trust.
Similar to ESR, LOGOS is a fully integrated developer and fund manager and manages all aspects of logistics and data centre real estate, including land sourcing, design and development, leasing, operations and asset management on behalf of some of the world's largest investors.
On the fund management side, LOGOS has built a very strong following with 22 institutional capital partners, 14 of which are new to the enlarged ESR Group.
Following the completion of the Transaction, ARA's business will be combined with ESR's platform. The enlarged ESR Group will become APAC's largest real estate and real asset manager powered by New Economy, and the world's third largest listed real estate asset manager. The combined AUM will reachUS$129 billion, of which overUS$50 billionis in New Economy real estate, making it the largest such platform in APAC.
Jeffrey Perlman, Chairman of ESR, said: "Our vision has always been to build a leading fund manager focused on technology enabled real estate, especially logistics and more recently data centres, on the back of major secular trends including the rapid rise of e-commerce, digital transformation and the financialisation of real estate in Asia Pacific. With the acquisition of ARA, we are very excited to bring two best-in-class businesses together to formAsia Pacific's#1 real asset fund manager powered by the leading New Economy platform. We are currently witnessing a 'once in a generation' change in real estate where leading global investors are seeking to rebalance their portfolios by divesting institutional quality assets in order to redeploy that capital back into New Economy real estate where they have been meaningfully underweight. By creating a one-of-a-kind closed loop solutions ecosystem for capital partners with the addition of ARA, we can leverage our perpetual capital vehicles to help them divest these assets and captively redeploy back into New Economy real estate via ESR and LOGOS, the largest New Economy real estate platform inAsia Pacificwith overUS$50 billionof AUM. As we usher in this new era of real estate, the enlarged ESR Group is even better positioned to capture this outsized market opportunity."
Today, global investors are increasingly consolidating relationships towards a limited number of large-scale and professional managers, allocating more capital to a smaller roster of managers. The increasing average fund size – 80% of funds closed in 2020 are overUS$1 billionin size – underscores the trend of larger managers gaining greater share of fund commitments. The enlarged ESR Group, as one of the largest listed real estate investment managers globally, is poised to capitalise on this trend.
Jeffrey ShenandStuart Gibson, ESR Co-founders and Co-CEOs, said: "First, we want to welcome the ARA and LOGOS teams as well as our new strategic shareholders to the ESR family. This is an exciting time for ESR as we look forward to the promising future the combined platform is set to bring about. Post transaction, the enlarged ESR Group will witness immediate growth in size, scale and offerings – as global investors seek to give more capital to increasingly fewer managers, we are uniquely positioned to capture an outsized share of that capital. Additionally, we have always believed in the growth of logistics and data centre real estate and this transaction accelerates our vision considerably as our geographic reach will now extend across over 95% of GDP inAsia Pacific, total New Economy AUM will rise by 49% to overUS$50 billion, portfolio GFA will increase by 44.3% to 29 million sqm and we will have 'dry powder' ofUS$7 billionto deploy into new logistics and data centre projects.
