EMP and ESR Australia have entered into a binding agreement with Blackstone to acquire the Milestone Portfolio and MOL for a total consideration of $3.8bn - the most significant logistics portfolio transaction in Australia - subject merger clearance approval in relevant jurisdictions. 

The deal represents encompasses 45 high-quality, income-producing assets across Australia’s major capital cities. With a land area of 3.6m sqm and GLA of 1.4m sqm the site cover is a modest 38% and provides significant scope for further development. The transaction will see ESR emerge as the third-largest logistics landlord in Australia with AUM increasing to $7.9bn.

ESR Australia partnered with GIC as its capital partner for the acquisition under a newly formed investment vehicle, EMP, which will see ESR contribute 20% 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.

The Portfolio boasts a very high quality customer base consisting of national, multi-national, ASX listed or government clients such as Woolworths, Lineage Logistics, Toll (Japan Post), Daimler Benz, Australia Post, Mazda and WesTrac. The consideration attributed to the Portfolio is expected to provide an initial yield of 4.5% with a 6.9-year Weighted Average Lease Expiry.

ESR Australia CEO, Phil Pearce, described the acquisition as transformative, providing ESR Australia with immediate scale making ESR the third largest owner of logistics real estate in Australia.

“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 e- commerce sales.”

 “The portfolio is land rich, with low site coverage of only 38%, providing plenty of scope for ESR Australia to redevelop these assets over time,” Mr Pearce said.

Jeffrey Shen and Stuart Gibson, ESR Co-founders and Co-CEOs, remarked, “We are extremely pleased to deepen our partnership with GIC with this momentous transaction. The acquisition of the Milestone portfolio is a significant leap forward for ESR. This tremendous expansion not only adds immediate scale to our presence in Australia and the region, but also extends our footprint and reaffirms our commitment to one of our highest conviction markets in Asia Pacific.”

“Under Phil’s leadership, we have built a great platform and a top-notch team in Australia. This has been a key factor in ESR’s ability to establish itself as a major mover in this critical market.”

The sale process commenced in January 2021 and was highly competitive with more than ten first-round bids received, subsequently reduced to five parties.

“It is hugely gratifying that the momentous effort put in by everyone on ESR Australia’s team has seen the realisation of this outcome. I wish to thank our team for their hard work and efforts which has enabled us to conclude this transaction with Blackstone. We are looking forward to the MOL team joining our team here in Australia,” Mr Pearce said. 

JLL acted as an advisor for Blackstone in partnership with Eastdil Secured. 

Key leads from JLL were Tony Iuliano, Stuart Crow and Adrian Rowse. 

“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. Increasingly, we are seeing opportunities for investors to expand their exposure in logistics through platform deals. We congratulate ESR, GIC and Blackstone on this landmark deal and JLL is proud to have advised on this transaction,” says Stuart Crow, CEO, Capital Markets, Asia Pacific, JLL. 

JLL’s Head of Capital Markets, Industrial & Logistics - Australia, Tony Iuliano told WILLIAMS MEDIA, “54 groups in the data room - a combination of sovereign wealth funds, pension funds, REITs and life insurance groups totalling $45B of capital that participated. 

“This transaction is a transformational event and one which will be most likely never been seen again in logistics. 

“It’s history in the making and a transformational transaction for Australian real estate. 

“The opportunity to access over 90 tenants and a management platform with significant IP is enormous for any group.” 

JLL advised in partnership with Eastdil Secured.