ESR buys Blackstone's Aussie logistics assets for A$3.8b

Sydney

ESR Cayman Ltd has agreed to buy a portfolio of warehouse and logistics assets in Australia from Blackstone Group for about A$3.8 billion (S$3.9 billion) in the country's biggest real estate transaction in five years.

The Hong Kong-listed property manager partnered GIC for a newly-formed vehicle in the acquisition of the assets, according to a press release on Sunday.

The Singaporean sovereign wealth fund will contribute 80 per cent of equity, while ESR will account for the rest. The portfolio consists of 45 assets held by Blackstone's Milestone Logistics.

Blackstone started the sale process in January and received more than 10 first-round bids, according to the statement. ESR beat out four other shortlisted bidders, it said.

The sale would mark the largest real estate transaction in Australia in five years, according to data compiled by Bloomberg. It underscores the growth in warehousing, which has become one of the most sought-after property classes, partly because of the surge in online shopping during the pandemic.

The logistics portfolio was assembled by Blackstone over dozens of individual transactions that began with a deal with Australian developer Goodman Group in 2016.

The assets, which count Woolworths Group Ltd and Australian Postal Corp among clients, are expected to provide an initial yield of 4.5 per cent with a 6.9-year weighted average lease expiry. The transaction will take ESR's asset under management in Australia to A$7.9 billion. BLOOMBERG