ESR Australia settles on Milestone Portfolio and operating business in Australia's largest ever property deal

ESR Australia has settled on the purchase of the Milestone Portfolio and operating company in the largest-ever property transaction in Australia, officially taking control of the 45 high-quality, income-producing assets set over 3.6 million sq m and collectively valued at circa AUD3.8 billion reflecting a yield of 4.5 per cent.

The acquisition represents a 72 per cent uplift in ESR Australia’s AUM, which is now valued at AUD8.1 billion, and positions ESR as the third largest industrial owner in the country, within three years of entering the Australian market.
 
ESR Australia CEO, Phil Pearce, says: “In recent months, there have been several assets transact at sub 4 per cent yields along the eastern seaboard, which provides further validation for the price paid for The Portfolio and ESR’s view that the market would continue to be strong.
 
“Land prices around the country have continued to grow at accelerated rates, which will allow ESR to bring forward the redevelopment of several assets across The Portfolio, further enhancing our value proposition. The underlying land value was a crucial part of our underwrite as we view the assets as very strategically located.”
 
Within the Milestone Portfolio, ESR has identified at least 14 assets to be developed in the coming three to seven years, in addition to its development pipeline of AUD2.4 billion, resulting in a cumulative development pipeline valued at AUD3.3 billion.
 
ESR Group Co-founders & Co-CEOs, Jeffrey Shen and Stuart Gibson, says: “This transformational transaction enables ESR to fulfil its ambition of scaling up the Australian operations and confirming its leadership position in the country. The team, led by Phil Pearce, will now focus on capitalising on the vacant and under-utilised land within The Portfolio, and leveraging our expertise to accelerate development activities. We are confident that the expansion of our Australian platform – which has grown in scale, resources and human capital – will create significant, long-term values for our stakeholders.”
 
Pearce adds: “We are looking forward to welcoming the Milestone employees into the ESR business, along with the contribution they will make as we look to continue to expand our business and capabilities to the benefit of our customers and capital partners.”