ESR inks multi-lease agreement with Mitsubishi Fuso Truck and Bus Corporation at ESR Yokohama Sachiura park clearing strategic Higashi Ogishima site for imminent development

Transaction results in accelerated leasing at ESR Yokohama Sachiura DC1 and development commencement of ESR Higashi Ogishima DC1

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TOKYO, JAPAN/HONG KONG SAR - Media
OutReach - 26 November 2020 - ESR Cayman Limited (“ESR” or the “Group”; SEHK Stock Code: 1821), the
largest APAC focused logistics real estate platform, and Mitsubishi
Fuso Truck and Bus Corporation (“MFTBC” or “Mitsubishi Fuso”) have worked
closely on a sweeping reorganisation of logistics operations in Kanagawa
prefecture, Japan. The landmark transaction has resulted in 2 new lease
agreements between ESR and MFTBC and material amendment of a third one. It
involves ESR’s 2 leading park projects under development in Tokyo with a
combined total build-out area of circa 900,000 sqm and expected completion
value in excess of US$3.0 billion.

 

Higashi Ogishima: the parties have agreed to relocate MFTBC’s
1,200-truck domestic parking operation away from its historical site in Higashi
Ogishima which ESR has controlled since 2016. The 8 Ha site being vacated will
now develop as the first phase of ESR Higashi Ogishima park. Construction of
the 310,000 sqm Higashi Ogishima DC 1 will commence next month for planned
delivery in December 2022.

 

Featuring the first ever 9-storey warehouse design
in Japan as well as advanced sustainability solutions ESR Higashi Ogishima park
will set a new benchmark for distribution centre design where optimal
integration into the urban fabric and lower environmental impact are achieved
without sacrificing building functionality and high-throughput. E-commerce and
3PLs choosing to operate at ESR Higashi Ogishima will enjoy close proximity to
Haneda Airport and Tokyo 23 wards as well as a supportive ecosystem with co-location
of ancillary services including children’s day-care facilities of ESR partner BARNKLÜBB^™.

 

ESR Yokohama Sachiura Park: MFTBC has chosen to continue the domestic
distribution of its complete vehicles at ESR’s other distribution park in the
greater Tokyo area, ESR Yokohama Sachiura. More specifically, MFTBC will
operate from the 15 Ha expansion area earmarked by ESR for bespoke logistics
space requirements. In addition, Mitsubishi FUSO has reserved 4 Ha of adjacent
space to allow the potential future consolidation of other logistics activities
into a large built-to-suit facility to be developed by ESR.

 

In a further endorsement of the ESR Yokohama
Sachiura park, MFTBC has also elected to locate additional operations in
building DC1. As a result, ESR Yokohama Sachiura park which is
halfway into development will achieve 38% pre-completion occupancy across its
circa 350,000 sqm net rentable area.

Stuart Gibson, Co-founder and Co-CEO of ESR,
commented: “This transaction is especially gratifying as it showcases several
key capability differentiators of the ESR platform. Evidently it allows our
most prized land holding to develop timely into ESR’s most advanced product to
date. It also helps us cement our relationship with MFTBC who has been a
fantastic partner and who is equally interested in bringing innovative
solutions to our common set of third-party logistics clients with their
superior product line of commercial vehicles.”

 

Arne Barden, Head of Supply Chain Management MFTBC,
equally welcomed the transaction observing that “ESR’s Yokohama Sachiura site
is strategically located in Kanagawa Prefecture and will invigorate the
continuous improvements we implement in our operations” and expressed interest
in “further collaborating with ESR on sustainability initiatives aimed at urban
logistics”.

 

Stefan Rödler, Head of Asia-Pacific Real Estate at Mitsubishi
Fuso’s parent company Daimler AG, who steered the local teams through the
year-long negotiation concluded: “ESR has proven a reliable and creative
partner and we look forward to expanding collaboration across other geographies
to provide other Daimler business units with the same service level.”

 

Reflecting on industry trends Mr. Gibson remarked
that this transaction vindicates ESR’s longstanding choice of targeting larger
and more capital-intensive brownfield sites — including the ones where patient and
strategic asset management work is required — in the pursuit of the large
multi-tenanted buildings and parks favoured by occupiers and that “the ability
of all the ESR teams to bend functional lines to come as one on complex
transactions should serve ESR and its investors well in an increasingly
competitive market.”  

 

Expanding on Mr. Gibson’s comment, Pierre-Alexandre Humblot, ESR Managing Director Fund
Management and Capital, emphasised the central role played by the 2
development funds involved – RJLF2 and RJLF3 – and their investor
representatives: “Managing a plain-vanilla development on behalf of 3^rd-party
capital is difficult enough. Here we had brownfield sites, criss-crossed
ownership by vehicles with different mandates and a large corporate tenant suitably
expecting their evolving occupancy requirements to be the leading
consideration. Our LPs displayed great agility to focus on the bigger picture
in a sign that 3^rd-party capital is eager and capable of undertaking
the more advanced transactions provided they are afforded the most complete
insights into the developer thought process.”

 

The related
sale of Higashi Ogishima Phase 1 accelerates RJLF2 divestment while allowing
RJLF3 to complete its circa US$600 million equity deployment just 18 months
into its investment period.