ESR gets $242m loan from UOB to buy prime Tokyo land for distribution centre

SINGAPORE - Logistics real estate company ESR has obtained a 20 billion yen (S$242 million) loan from United Overseas Bank (UOB) to partially fund ESR's acquisition of a plot of land in Yokohama, Japan, to be developed into a billion-dollar distribution centre.

UOB's Tokyo branch and ESR Sachiura TMKs inked the non-recourse financing facility agreement.

ESR Sachiura TMKs are onshore entities incorporated in Japan for the purpose of developing the ESR Yokohama Distribution Centre (ESR Yokohama DC) project, which will be one of the largest master-planned logistics parks in Japan, both organisations said in a joint statement on Tuesday (April 16).

The total investment for the project's first phase development is estimated to exceed US$1 billion.

Besides the loan from UOB, ESR will use the equity investments from its capital partners including Equity International, and a major US pension fund, to finance the land acquisition.

Located within the Greater Tokyo Bay area, with quick access to Tokyo's central business district, the ESR Yokohama DC will initially comprise two four-storey logistics facilities, with a total gross floor area of 393,226 sq m.

The latest transaction marks the first collaboration between UOB and ESR in Japan, and adds to the bank's support of ESR's expansion in other Asia-Pacific markets, including China, Singapore and Australia, according to the statement.

Lim Lay Wah, head of global financial institutions group at UOB, said: "At UOB, we are dedicated to providing timely, customised and distinctive financial solutions to meet our clients' needs... We look forward to extending our support to include cash and risk management solutions to assist ESR in optimising its cross-border business operations and cash flow."

Stuart Gibson, ESR co-founder and co-CEO, said: "UOB has been an important partner of ESR in supporting our rapid business growth across the region. We are most delighted to extend this relationship further to Japan, a key market for ESR where we see immense growth potential.

"With the support of UOB and other leading institutional investors, we are set to build ESR Yokohama DC as a flagship development, not only for ESR's growing network of best-in-class facilities, but also for the burgeoning Japanese logistics property market."

As at 2pm on Tuesday, UOB shares were trading at $26.75, up 0.5 per cent, or 14 cents, while units in ESR-Reit were trading at $0.525, down 0.9 per cent, or 0.5 cent.