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ESR Cayman’s data centre commitments on verge of $4bn GAV

Latest bid to use $1bn in building data centre and logistic park could bring 2021 announcements to US$3.83 billion.

By João Marques Lima

Founder and Editor, The Tech Capital

4 Mins

July 29, 2021 | 1:20 AM BST

APAC focused logistics real estate platform ESR Cayman (HKG: 1821) said it plans to invest up to US$1 billion in building a data and logistics centre in the Nagasaki Prefecture, south Japan.

The project is part of a larger development orchestrated by the NIKI Chyau Fwu (Parkview) Group that is seeking a resort operating license currently under revision by local authorities and Japan’s central government.

NIKI has in the past few days announced several new external partners as it competes with two other brands to build the integrated resort (IR) in Sasebo City, the second-largest city in Nagasaki Prefecture.

In addition to ESR, the company said Global Gates, Plus Furniture Company, Isetan Mitsukoshi Property Design, Light Publicity, Ura Building Research Institute, Ebara Shoji, Taiyo Kogyo, Nippon Steel Tower Industry, and Kokusai Kogyo have all joined the consortium bidding for the IR.

Stuart Gibson, co-founder and Co-CEO of ESR, said: “The NIKI IR concept as well as the consortium team they have brought together is truly the best in class.

“The development would create recreational, hospitality and cultural venues, making it a world class destination for global tourism. This would be a perfect fit with our operations, and we would commit to create a 21st century infrastructure centre in the vicinity of their property should they get the license.”

Etsuko Oishi, EVP of NIKI, added: “We are focused on achieving world-class IR that contributes to the revitalization of the local economy and brings long-term benefits to the region.

“Global leaders such as ESR will invest in the Kyushu region. This is an example of how our investment will impact the region beyond IR. We are pleased to be able to contribute to promoting such a large secondary benefit.”

If approved, this will not be ESG’ debut in the data centre space as the company acquired a site in Osaka, Japan, last April to expand it from the current building to three facilities, providing a combined 78MW.

The total investment could reach the US$2.15 billion mark, dependent on customer sign ups. The first building is due to begin construction soon, with the opening date scheduled for 2023.

More recently, in May, ESR acquired a data centre facility in Hong Kong, with plans to create a gross asset value (GAV) of $675 million.

The acquired asset is located in Kwai Chung and the group plans to work with capital partners and operators to convert the building into a data centre with a facility load of 40MW.

In a company statement, the company said: “The Osaka development, together with this acquisition in Hong Kong, adds to ESR’s data centre strategic push which now includes exclusivity on land and power approvals to potentially develop over 250 megawatts across major markets in APAC.”

Earlier this month, ESR also upsized its Japan Logistics Fund III to JPY150 billion (circa US$675 million), a in development joint venture established with Dutch pension fund APG (APG) and a global institutional investor.

The new capital has effectively doubled the size of RJLF3 to JPY150 billion (circa US$1.35 billion) in total capital commitment, bringing the total investment capacity to as much as JPY470 billion (circa US$4.2 billion) over time.

Jeffrey Shen and Stuart Gibson, Co-founders and Co-CEOs of ESR, said: “Institutional investment in Japan and APAC’s logistics sector has been very strong, as e-commerce acceleration and structural shifts in supply chain management continue to fuel demand for well-located, large-scale modern

logistics properties. “Against this backdrop, we are delighted to have created yet another successful vehicle with our longstanding capital partners and extend our record of delivering consistently solid performances across our APAC portfolio.”

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João Marques Lima

Founder and Editor, The Tech Capital

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