Logistics real estate firm ESR Cayman has closed its first data center development fund.
The company this week announced the close of over $1 billion in equity commitments for its inaugural vehicle, Data Centre Fund 1 (ESR DC Fund 1), dedicated to the development of its data center business.
The fund’s institutional investors include sovereign wealth and pension funds. ESR said it will raise a separate discretionary capital sleeve to co-invest up to another $1.5 billion into the fund, while partners have an upsize option of an additional equity commitment of $1.5bn, bringing the total investment capacity to as much as $7.5bn.
ESR said its current data center development portfolio comprises projects in Hong Kong, Osaka, Tokyo, Seoul, Sydney, Mumbai, and Singapore, delivering 300MW.
Jeffrey Shen and Stuart Gibson, co-founders and co-CEOs of ESR, said: “APAC is the prime market for data center development and investment in the new era of digitalization. The substantial first close of our inaugural data center fund marks a significant milestone for ESR as we continue to grow and scale our digital infrastructure business. We thank our capital partners for their strong support to this exciting effort.”
The group, with backing from investors such as Warburg Pincus, has plans to build a data center ecosystem across the region - buying a data center in Osaka in April 2021, which it plans to develop into a three-facility campus. It is in the process of converting a cold storage facility in Hong Kong into a 40MW data center, and announced plans for a 20MW data center in Tokyo earlier this year.
The company hasn’t shared any information about its developments in Singapore, South Korea, Australia, or India.
ESR shareholders recently approved the $5.2 billion acquisition of ARA Asset Management. ARA has a data center footprint through its LOGOS Group subsidiary, which recently partnered with Pure Data Centres for a 20MW facility in Indonesia.
Diarmid Massey, ESR Data Centres CEO, said: “Our ambition is to offset high energy consumption by aligning with our ESG strategy to refurbish, re-develop, convert some of our existing 39.8 million sqm GFA of assets into large and Edge data centers, and to explore sustainable options through actual renewable energy generation from the rooftops.”
Devashish Gupta, ESR Data Centres CIO, added: “The APAC Data Center fund is uniquely placed to take advantage of ESR Group’s adjacencies in land, power, fiber origination, strong pipeline of recently acquired data center specific sites, a dedicated team of experienced Data Centres’ professionals, and partnerships with best-in-class data center operators for colocation assets. Our
ability to offer powered shells, fully fitted, and co-location assets to serve hyperscalers, enterprises as well as operators.”
ESR is one of a number of logistics & warehouse industrial real estate firms looking to move into the data center space. The likes of Prologis, GLP, Segro, P3, and others are also looking to develop facilities in the US, Europe, and Asia Pacific.
More in Investment / M&A
Conference Session DCD>Talks State of the Market with Howard Berry, Avison Young