Asia-Pacific logistics giant ESR Group Ltd. is reportedly evaluating a significant strategic shift. According to sources familiar with the matter, the company is considering selling a portion of its assets in China. This move, which could involve individual properties or an entire portfolio worth several billion dollars, aims to allow ESR to sharpen its focus on other key markets.
Strategic Review and Potential Sale
The Singapore-headquartered investor in logistics and industrial properties plans to appoint financial advisers to review its options for the potential disposal. The people, who asked not to be identified as the information is private, emphasized that these deliberations are at a preliminary stage and may not ultimately result in a transaction. ESR generated approximately 27% of its revenue from Greater China in 2024, underscoring the region's importance to its business.
ESR's Footprint and Continued China Interest
Despite the potential asset sales, the company maintains a strong interest in the Chinese market. One source indicated that ESR is actively exploring new growth and investment opportunities within the country. Its extensive portfolio in Greater China, valued at roughly $30 billion in managed assets, includes mainland logistics parks, a Hong Kong data center, Shanghai retail and office spaces, and a life sciences facility.
The company's revenue stream is diversified across the Asia-Pacific. After Greater China, Australia and New Zealand contributed 25% of its 2024 revenue, while Southeast Asia accounted for 22%. ESR also holds real estate assets in other parts of Asia and has a presence in Europe.
Context of Foreign Investor Retreat
This potential move by ESR aligns with a broader trend of foreign investors reassessing their positions in Chinese real estate. As reported by Bloomberg News in October, foreign property buyers have invested nearly $140 billion in Chinese assets like offices, warehouses, malls, and data centers over the past 15 years. With the market experiencing volatility, many are now seeking exits.
This strategic review follows a major corporate change for ESR. In June, a powerful consortium including Starwood Capital Group, Sixth Street Partners, SSW Partners, Warburg Pincus, Qatar Investment Authority, and ESR's own founders approved a buyout of the firm for about $7 billion. Subsequently, the company was delisted from the Hong Kong stock exchange.
ESR has not provided an official comment on the reports regarding the potential sale of its China assets.
