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- An ESR Australia and Singapore-based GIC joint venture has acquired Blackstone’s ‘Milestone Portfolio’ for a record-breaking $3.8 billion
- The deal is the largest logistics real estate transaction in Australian history, and post-transaction, ESR will emerge as the third-largest manager of logistics and industrial real estate in Australia
- The sale process commenced in January 2021 and was highly competitive with more than ten first-round bids received, subsequently reduced to five parties
- ESR Australia CEO Phil Pearce described the acquisition as transformative, providing ESR’s Australia business with immediate scale
- The transaction is subject to Foreign Investment Review Board (FIRB) approval being obtained
An ESR Australia and Singapore-based GIC joint venture has acquired Blackstone’s ‘Milestone Portfolio’ for a record-breaking $3.8 billion.
The deal is the largest logistics real estate transaction in Australian history, and post-transaction, ESR will emerge as the third-largest manager of logistics and industrial real estate in Australia.
The sale process commenced in January 2021 and was highly competitive, with more than ten first-round bids received, subsequently reduced to five parties.
The platform sale, which JLL advised in partnership with Eastdil Secured, comprises 45 assets held by Blackstone’s Milestone logistics portfolio, which includes properties in Sydney, Melbourne, Brisbane, Adelaide and Perth.
ESR Australia has reported it has partnered with GIC as its capital partner for the acquisition under a newly formed investment vehicle, ESR Milestone Partnership (EMP), in a deal that will see ESR contribute 20 per cent of the equity.
ANZ Banking Group, Mitsubishi UFJ Financial Group, Standard Chartered and United Overseas Bank are providing fully underwritten debt facilities for the acquisition of the real estate assets.
ESR Australia CEO Phil Pearce described the acquisition as transformative, providing ESR’s Australia business with immediate scale.
“The opportunity to secure such a large portfolio with extremely well-located assets across Adelaide, Brisbane, Melbourne, Perth and Sydney, strategically 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 eCommerce,” he said.
“The portfolio is land rich, with low site coverage of only 38 per cent, providing plenty of opportunity for ESR to redevelop these assets over time,” said Pearce.
National investment volumes in industrial real estate reached a decade-high, reaching $8.8 billion in 2020, up from $7.7 billion in 2019 — growth primarily fuelled by the eCommerce sector, according to Knight Frank.
The portfolio customer base consists of national, multi-national, ASX listed or government clients such as Woolworths, Lineage Logistics, Toll (Japan Post), Daimler Benz, Australia Post, Mazda and WesTrac.
ESR Australia said the consideration attributed to the Portfolio is expected to provide an initial yield of 4.5 per cent with a 6.9-year Weighted Average Lease Expiry.
JLL Asia Pacific Capital Markets CEO Stuart Crow said it was a landmark deal.
“The Australian logistics market is very attractive to global investors, with the sector viewed as one of the most dynamic and resilient asset classes globally,” he said. “Increasingly, we are seeing opportunities for investors to expand their exposure in logistics through platform deals.”
The transaction is subject to Foreign Investment Review Board (FIRB) approval.
