CapitaLand Investment (CLI) and APG Investments Asia entered into a joint venture with an initial equity investment of S$570 million to establish a self-storage platform.
The deal comes with an option to increase their investment up to S$1.14 billion, with APG contributing 90 per cent and CLI contributing the remaining 10 per cent to acquire Extra Space Asia (ESA) and grow the platform, according to a joint press release on Thursday (Oct 27). (See *Amendment note)
ESA is a self-storage business with owned and leased facilities in various Asian cities. It generates the bulk of its net property income in Singapore.
Post-acquisition, ESA will be repositioned into an operating company/property company structure to facilitate future expansion.
CLI is the listed investment management business arm of CapitaLand Group, while APG Investments Asia is the investment manager for Dutch pension fund APG.
Both parties were drawn to the Asian self-storage sector due to its strong fundamentals, underpinned by high urbanisation rates, high population density, an increasing proportion of renters and the rapid growth of e-commerce, said the companies in a press release.
It also highlighted the sector's growth potential and opportunities for consolidation.
Patrick Boocock, CLI's chief executive of private equity alternative assets, real assets, noted the resiliency of the self-storage sector in Asia during the pandemic, and said it would continue to benefit from strong growth tailwinds supported by favourable demographics and lifestyle trends in the region.
"We view the self-storage platform as an extension of CLI's logistics platform, well-positioned to capture the increasing demand for flexible storage and last-mile delivery requirements in tandem with the growth of e-commerce," he said.
As at 1.44 pm on Thursday, shares of CLI were trading 1.3 per cent or S$0.04 lower at S$3.12.
*Amendment note: An earlier version of this story said the joint venture deal between CLI and APG came with an option to increase their investment up to S$1.14 billion to acquire ESA. The capital is meant to both acquire ESA and grow the platform.