ESR Group gets regulatory nod to list logistics Reit in China
Its IPO is expected to raise around 2.44 billion yuan
HONG Kong-listed real estate fund manager ESR Group’s application to list ESR China Real Estate Investment Trust (Reit) has been approved by the China Securities Regulatory Commission (CSRC).
As the Reit sponsor and project manager, ESR will now be able to provide the China-based logistics Reit a future pipeline of assets from its assets under management (AUM) and development pipeline.
ESR China Reit’s initial public offering (IPO) is expected to raise around 2.44 billion yuan (S$455.3 million).
ESR has committed to subscribe for a 34 per cent stake in the Reit, with the remaining 66 per cent to be taken up by cornerstone and retail investors as well as public institutions. The fund manager said so far, its China Reit has secured cornerstone investors including leading financial institutions and securities firms.
It projects an annual cash distribution rate of 4.5 per cent for 2024, and 4.6 per cent for 2025.
Gaining regulatory approval for the Reit’s upcoming listing “ushers in a new chapter of exciting growth” for ESR, said Stuart Gibson, the fund manager’s co-founder and co-chief executive.
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“The Reit is an important pillar of our growth ambitions in the China market and expands the channels to accelerate our capital recycling,” he added.
ESR China Reit’s current portfolio holds three self-owned logistics facilities at Kunshan in China’s Jiangsu Province, which ESR Group highlighted as a major hub for China’s last-mile logistics networks.
Collectively dubbed Jiangsu Friend Warehouses, the three assets have a total gross floor area (GFA) of over 426,000 square metres (sq m) with an average occupancy rate of over 90 per cent over the last five years.
Phase I of the project spans over 135,000 sq m, while the second phase takes up more than 85,000 sq m. The project’s third and final phase has over 206,000 sq m in GFA.
Tenants include multinational companies in sectors such as logistics, e-commerce and fast-moving consumer goods.
Since 2011, ESR has been developing these three seed assets, which Gibson thought to be among the company’s best assets in China.
“We are confident this portfolio will set the foundation for us to continue to grow the China Reit with additional assets contributed from our portfolio and bring more opportunities for us to collaborate with onshore financial institutions and investors in China,” he said.
A subsidiary of ESR will continue to manage the three assets post the listing of ESR China Reit, with China’s Avic Fund appointed as the licensed Reit manager under current China Reit listing rules.
China Merchants Securities is the financial adviser to the Reit.
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