Canada Pension Plan Investment Board (CPP Investments) and Hong Kong-listed ESR Cayman Limited have expanded their joint venture in South Korea, upsizing their investment in the vehicle by a further US$500 million. The new capital, with the majority coming from CPP Investments, will double the size of the venture to US$1 billion in total equity allocation.
Established in 2018, the Korea Income JV focuses on investments in logistics assets located in major metropolitan areas across the country. The portfolio, which is managed by ESR Kendall Square, consisted of 12 institutional-grade modern logistics facilities with an aggregate gross floor area of 774,666 square metres. Six of the 12 assets were divested to ESR Kendall Square’s Korea Logistics real estate investment trust in December 2020.
In addition to the Korea Income JV, CPP Investments and ESR have collaborated on two other joint ventures focused on the country’s logistics sector since 2015.
Jimmy Phua, head of Asia real estate at CPP Investments, says: “Korea is already one of the most developed e-commerce markets in Asia and the pandemic has accelerated the growth in the past year, further fuelling the demand for quality logistics facilities. By expanding our successful joint venture with ESR, we are able to meet the fast-growing demand and strengthen our leadership position in the market, ultimately delivering long-term value for CPP contributors and beneficiaries.”
Thomas Nam, chief executive officer of ESR Kendall Square, the firm’s South Korean platform, adds: “The demand and long-term prospects of high-quality logistics facilities continue to show stable growth, especially as e-commerce adoption and structural changes in supply chain management have been driven forward during the Covid-19 pandemic. With the increased capital commitment, we will be in an even better position to respond quickly and strategically to opportunities as they arise.”