APG, CPPIB Double Down on South Korean Industrial Venture with ESR

By Mario Marroquin

A joint venture by asset manager ESR of Seoul, and pension funds APG of the Netherlands and the Canada Pension Plan Investment Board (CPPIB), is gearing up to increase exposure to South Korean industrial real estate. According to a news release from ESR, the venture partners are backing a second round of fundraising for a $2 billion industrial development partnership that began in 2020.

ESR, APG and CPPIB have deployed approximately $1 billion since 2020 and are on track to develop nearly 14 million square feet of industrial space.

“We continue to be supportive of the sector, which complements very well with our existing regional logistics exposure and offers very strong risk-adjusted returns that will benefit our pension fund clients and their participants,” Graeme Torre, managing director and APG’s head of real estate, Asia Pacific, said in a prepared statement. “With ESR's leading track record and expertise in the local market, as well as their [environmental, social and governance] credentials, we are pleased to continue our partnership with ESR and CPP Investments."

The joint venture (ESR-KS II) focuses on developing logistics centers in the Busan and Seoul metros, and follows the ESR-KS I venture, which deployed approximately $1.1 billion using the same partners.

CPPIB and ESR have also collaborated on two other logistics ventures since 2015.

“We continue to see strong demand for quality logistics assets in the country,” said Gilles Chow, head of real estate North Asia at CPPIB. “Korea is one of the most sophisticated internet and e-commerce markets globally.”

Global investors including AEW and Hines have also made plays in South Korean logistics in recent months. AEW was reported to have purchased a $538 million logistics portfolio in November, while Hines was reported to have broken ground on a second logistics development earlier this year.