Industrial specialist ESR is adding to its Australian pipeline with the acquisition of a site near the future Western Sydney airport for A$70 million ($45 million).
With 4.1 million square metres (44 million square feet) of warehouse space already developed in the country, ESR aims to build around 82,000 square metres of new logistics capacity on the plot on Martins Road in the Badgerys Creek area, according to a statement by the company, with an eye to the airport’s planned opening in 2026.
“Future customers at ESR’s Martin Road site will have the ability to be operational as soon as Western Sydney Airport comes online,” said Phil Pearce, chief executive of ESR Australia. “They will also have the benefit of leading-edge renewable energy infrastructure, which is an increasing concern for our customers with the rise of automation and electrified fleets.”
Including the cost of the site acquisition, ESR plans to invest around A$270 million in the project, as it converts the current 17 hectare (42 acre) farm into a set of four warehouses.
Western Airport Competition
The site is located around three kilometres (1.86 miles) from the future Western Sydney International Airport, which is being built to handle 10 million passengers and 220,000 tonnes of cargo annually. ESR noted the plot’s frontage along Martin Road, which is the main ground transport artery in the area.
The acquisition in the Liverpool City Council area is ESR’s first in the area surrounding the airport, which is being developed as the Western Sydney Aerotropolis. The Hong Kong-listed company is developing the project under its ESR Australia Development Partnership II (EADP II), which is backed by Singaporean sovereign fund GIC.
At the stated values, ESR paid the equivalent of A$4.1 million per hectare for the site, and will be spending around A$3,292 per square metre to develop the project.
“ESR Australia is pleased to secure the scalable Martins Road site and will exercise its robust development capability to ensure the delivery of premium facilities in line with the anticipated opening of Western Sydney Airport in 2026,” Pearce added.
The seller was an unnamed Vietnamese private family office represented by Colliers’ head of Asia markets for Australia, Harry Bui.
The Western Sydney Aerotropolis has been a top target for logistics investors in recent years with DHL having acquired a 24 hectare site in the area for A$140 million in March of last year. Frasers Property, Goodman and local player Stockland have also snatched up properties in the district, according to local media reports.
GIC Partnership Expands
ESR will be adding the western Sydney site to a development fund which reached a first closing of A$540 million in October of last year, with GIC contributing A$490 million as the cornerstone investor in EADP II.
In June of this year ESR said that it had acquired a manufacturing facility in Sydney’s Botany Bay area for A$143 million on behalf of the same vehicle.
The fund targets A$1 billion in total equity and is a follow-on to ESR’s 2020-vintage ESR Australia Development Partnership which raised the same amount of cash.
GIC committed A$400 million to EADP I with other sovereign investors, life insurers and ESR’s Pan Asia Fund also contributing capital.
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