ESR to acquire ARA Asset Management

 ESR to acquire ARA Asset Management

A landmark transaction to create APAC’s largest real asset manager

powered by the New Economy

• Combined AUM1 of US$129 billion, more than 2x the next largest manager in APAC and 3rd largest listed

real estate investment manager globally

• Addition of LOGOS, ARA’s captive logistics and data centre specialist, cements the enlarged ESR Group’s

position as the largest “New Economy”

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real estate platform in APAC with over US$50 billion of AUM

• Enhanced resilience from the increased contribution from fund management income with predominantly perpetual and core-capital vehicles

• Best-in-class management team with a supportive strategic shareholder base and a deep-rooted

commitment to ESG

HONG KONG / SINGAPORE, 4 August 2021 – ESR Cayman Limited (“ESR”; SEHK Stock Code: 1821) and

ARA Asset Management (“ARA”) today 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 (the “Transaction”). ESR’s founders along with OMERS and JD.com (which in total represent all

the shareholders who have representatives on the ESR board) with an aggregate shareholding of 46%

have provided irrevocable undertakings to vote in favour of the Transaction.

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.

With US$95 billion in gross AUM3

, 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 over US$16 billion in equity capital since 2016, which has supported a gross transaction volume

of acquisitions, divestments and development activity of almost US$20 billion during 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 across Australia, China,

Singapore, Indonesia, Malaysia, Vietnam, India, Korea and New Zealand. On the back of its continued

expansion across APAC, LOGOS’ total AUM has nearly doubled over the past two years to US$17 billion,

comprising over 8.9 million sqm of property either owned or under development across 26 ventures,

including the Singapore listed ARA LOGOS Logistics Trust (SGX: K2LU). 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

1 Reported AUM of US$29.9 billion for ESR as of 31 December 2020 adjusted for AUM announced in 1H2021 (Milestone

Portfolio US$2.8 billion, RJLF3 US$675 million, Korea Income JV US$500 million). Gross asset under management by ARA

and its associates, inclusive of ARA LOGOS Logistics Trust as of 30 June 2021; adjusted for LOGOS’ acquisition of

Moorebank Logistics Park announced on 5 July 2021.

2 Logistics and data centres

3 Gross asset under management by ARA and its associates, inclusive of ARA LOGOS Logistics Trust as of 30 June 2021;

adjusted for LOGOS’ acquisition of Moorebank Logistics Park announced on 5 July 2021.

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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

reach US$129 billion, of which over US$50 billion is in New Economy real estate, making it the largest

such platform in APAC. Based on the financial results for 2020, over 80% of the enlarged ESR Group’s

EBITDA4 will come from New Economy real estate, while more than 50% of its AUM will come from

perpetual and core capital vehicles (including 14 listed REITs).

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 form Asia 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 in Asia Pacific with over US$50 billion of

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 largescale and professional managers, allocating more capital to a smaller roster of managers. The

increasing average fund size – 80% of funds closed in 2020 are over US$1 billion in 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 Shen and Stuart 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 in Asia Pacific, total New Economy

AUM will rise by 49% to over US$50 billion, portfolio GFA will increase by 44.3% to 29 million sqm and

we will have ‘dry powder’ of US$7 billion to deploy into new logistics and data centre projects.

“Furthermore, we have always been impressed by ARA’s and LOGOS’ commitment to ESG and we are

very excited about the broader impact the enlarged Group can have across our business and our local

communities. We firmly believe that the enlarged Group will build immensely on our long-standing

reputation as a robust, resilient and purpose-led organisation dedicated to creating sustainable value

for our shareholders, capital partners, customers and most importantly our valued employees.”

4 Based on 2020A segment EBITDA, before unallocated corporate costs.

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John Lim, ARA Co-founder and Deputy Chairman, said: “For close to two decades, ARA has established

itself as a leading real asset manager with a successful track record across geographies, asset classes

and strategies through multiple market cycles. We look forward to partnering with the ESR team,

whose expertise, dedication and vision have led to building the region’s leading logistics real estate

platform, and we can now together provide investors with a full suite of products with an outsized

contribution from New Economy real estate.”

Mr. Lim, together with a representative from each of CK Asset Holdings and Sumitomo Mitsui Banking

Corporation (“SMBC”), will be appointed to ESR’s board of directors. SMBC will also subscribe to a

US$250 million placement of new ESR shares to reinforce its commitment to the enlarged ESR Group.

The senior management of ARA and LOGOS will join the enlarged ESR Group to drive its next phase of

growth.

Also integral to ARA’s growth strategy is a strong focus on sustainability where it adopts a holistic

approach in incorporating ESG considerations into its business operations. ARA’s initiatives on the

sustainability front include joining as a signatory for the Net Zero Carbon Buildings Commitment under

the World Green Building Council and adopting the United Nation Principles for Responsible

Investment (UNPRI). In addition, ARA Group has secured green loans exceeding S$1 billion to date and

intends to expand its green financing initiatives. ARA is also an active participant in GRESB, and many

of its publicly listed REITs and private real estate funds have obtained 5-Star Ratings. ARA’s

sustainability efforts have been recognised by industry peers with numerous awards and accolades,

including Best Sustainable REIT Fund Manager in Asia Pacific, ESG Real Estate Investor of the Year in

Asia, among others.

John Marsh and Trent Iliffe, the Co-founders and Managing Directors & Co-CEOs of LOGOS, also

commented: “We are excited to partner with ESR in our next phase of growth. Our focus has always

been to create a leading logistics and data centre specialist that can deliver strong and sustainable

returns for all our stakeholders. The power of the combined platform will be unmatched and we look

forward to leveraging our complementary capabilities, expertise, commitment to ESG, capital and

customer relationships to deliver a best-in-class offering going forward.”

The Transaction brings together two of the region’s fastest growing platforms, ESR and LOGOS, to

form a leading New Economy real estate platform, doubling down on this rapidly expanding segment

with two leading growth engines. The enlarged Group’s New Economy AUM and development pipeline

will be the largest in APAC with top 1 or 2 positions in every market across the region.

Pursuant to the acquisition agreement, ESR will acquire 100% share capital of ARA via a 90/10

stock/cash transaction, which comprises:

• Stock (90%)5,6

: US$4.7 billion in new ESR shares (“Consideration Shares”) and Vendor Loan

Notes7

(“VLN”); and

• Cash (10%): US$519 million in cash funded by US$250 million share placement8

to SMBC and

US$269 million debt / internal resources

5 ESR has option to fund up to an additional US$1,038 million with cash.

6 Consideration Shares and VLN to be issued at price of HK$27.00 per share representing a premium / (discount) of (2.5%),

1.9% and 5.7% to last close, average closing price since 5 July 2021 and average closing price since 5 February 2021,

respectively.

7 VLN are non-voting, perpetual, zero-coupon, convertible to new ESR shares upon satisfaction of certain conditions,

including the condition that no mandatory general offer is triggered for ESR.

8 Strategic partner, SMBC, to subscribe to a US$250 million placement at an issue price of HK$25.35 per share to reinforce

commitment to the Enlarged ESR Group.

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All ARA shareholders will rollover their ownership interest into ESR and have agreed to lock-up of six

months. Furthermore, it is contemplated at the close of the transaction ESR’s founders and ARA’s cofounder, John Lim, would have committed to a lock-up of up to 36 months on a staggered basis.

The Transaction is subject to ESR shareholders’ approval at an EGM to be convened in due course. The

Transaction is subject to customary closing conditions including, amongst others, regulatory approvals.

Closing is expected by the end of 2021 or first quarter 2022.

Morgan Stanley Asia Limited is acting as financial advisor, and Freshfields Bruckhaus Deringer is

serving as legal counsel to ESR. In addition, United Overseas Bank Limited is providing certain debt

and financing related advice to ESR on the Transaction.

Citigroup Global Markets Singapore Pte. Ltd. is acting as lead financial advisor to ARA, and DBS and

OCBC Bank have also been appointed as financial advisors, and Latham & Watkins is serving as legal

counsel to ARA.

About ESR

ESR is the largest APAC focused logistics real estate platform by gross floor area (“GFA”) and by value

of the assets owned directly and by the funds and investment vehicles it manages with a growing

presence in data centres. ESR and the funds and investment vehicles it manages are backed by some

of the world’s preeminent investors including APG, CPP Investments, JD.com, Oxford Properties,

PGGM and SK Holdings. The ESR platform spans major economies across the APAC region, including

China, Japan, South Korea, Singapore, Australia, India, Vietnam and Indonesia. As of 31 December

2020, the fair value of the properties directly held by ESR and the assets under management with

respect to the funds and investment vehicles managed by ESR recorded approximately US$34 billion9

,

and GFA of properties completed and under development as well as GFA to be built on land held for

future development comprised over 20 million sqm in total. Listed on the Main Board of The Stock

Exchange of Hong Kong Limited in November 2019, ESR is a constituent of the FTSE Global Equity Index

Series (Large Cap), Hang Seng Composite Index and MSCI Hong Kong Index. For more information on

ESR, please visit www.esr.com.

About ARA Asset Management Limited

Founded in 2002, ARA is the largest real assets manager in Asia Pacific with a fast growing New

Economy real estate platform (Logos). With US$95 billion in gross assets under management across

28 countries, ARA Group 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 and credit globally. ARA’s vertically-integrated business

includes development and value-add asset management capabilites, an in-house capital raising team,

and property management expertise in local markets where ARA invests and manages assets. With a

resolute focus on creating sustainable value, ARA manages funds on behalf of many of the world’s

largest pension funds, sovereign wealth funds and financial institutions. For more information, please

visit http://www.ara-group.com.

9 Reported AUM of US$29.9 billion for ESR as of 31 December 2020 adjusted for AUM announced in 1H2021 (Milestone

Portfolio US$2.8 billion, RJLF3 US$675 million, Korea Income JV US$500 million).

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About LOGOS

LOGOS is a dynamic and growing logistics specialist with operations across Australia, China, Singapore,

Indonesia, Malaysia, Vietnam, India and New Zealand. LOGOS’ shareholders include ARA Asset

Management, the largest Asia Pacific real assets manager with US$95 billion in gross assets under

management globally; Ivanhoé Cambridge, a Canadian real estate industry leader investing in highquality properties and companies with C$60.4 billion in real estate assets globally; and LOGOS’

founders.

LOGOS manages every aspect of logistics real estate, including investment management, sourcing land

or facilities and undertaking development and asset management, on behalf of some of the world’s

leading global real estate investors. LOGOS has total Assets Under Management (AUM) of over US$17

billion, comprising over 8.9 million sqm of property owned and under development across 26 ventures,

including the Singapore listed ARA LOGOS Logistics Trust