Starwood Capital Enters into Partnership with ESR Group Co-Founders to Acquire 10.7% Ownership Stake

Rhea-AI Summary

Starwood Capital Group acquires a 10.7% equity stake in ESR Group, APAC's largest real asset manager, in a structured transaction. The acquisition extinguishes all outstanding sums under the existing margin loan facility of the co-Founders. Starwood Capital aims to strengthen its relationship with ESR and believes in the company's growth potential in logistics and data centres.

Insights

Market Research Analyst

The acquisition of a 10.7% equity stake in ESR Group by Starwood Capital is a strategic move that can have significant implications for the real estate investment landscape in the Asia Pacific region. ESR Group's focus on new economy sectors like logistics and data centres is particularly noteworthy, as these sectors are experiencing rapid growth due to the surge in e-commerce and cloud computing services. The full extinguishment of the outstanding sums under the existing margin loan facility could also suggest a strengthened financial position for ESR, potentially leading to increased investor confidence.

From a market perspective, this transaction may signal a bullish outlook on the APAC real estate market, especially in the logistics and data centre segments. The involvement of Starwood Capital, known for its global reach and financial muscle, could attract further investment into these sectors, potentially driving up asset values and increasing competition for strategic acquisitions. As logistics and data centres become more critical to global supply chains and digital infrastructure, this deal could be indicative of a broader industry trend towards consolidation and partnership between established players.

Financial Analyst

Starwood Capital's equity stake purchase in ESR Group represents not just an expansion of its investment portfolio but also a strategic alignment with a leading real asset manager in the APAC region. The transaction's implications for shareholders and potential investors are multifaceted. On one hand, the extinguishment of the margin loan facility could improve ESR's debt profile, potentially leading to better credit ratings and favorable borrowing terms in the future. On the other hand, the long-term commitment expressed by Starwood Capital may provide stability and an endorsement of ESR's management and strategic direction.

Investors should note the potential for synergies between Starwood Capital's expertise in real estate and ESR's operational capabilities. These synergies could lead to enhanced operational efficiencies, cost savings and revenue growth opportunities. Additionally, the transaction might pave the way for Starwood Capital to influence strategic decisions at ESR, potentially impacting the company's growth trajectory and investment priorities.

Real Estate Investment Expert

The partnership between Starwood Capital and ESR Group underscores a significant trend in the real estate investment sector: the increasing value placed on assets within the 'new economy' spaces like logistics and data centres. The alignment between the two firms suggests a shared vision for capitalizing on the high demand for infrastructure that supports e-commerce and digital services. This demand is propelled by a shift in consumer behavior and technological advancements, which require robust logistical networks and data storage capabilities.

Investors should be aware of the potential for this transaction to create a ripple effect in the real estate market, as it could encourage similar strategic investments by other firms looking to capitalize on growth in APAC's new economy sectors. Additionally, the partnership may lead to increased market competition and could potentially drive up the cost of entry for new players. The long-term impact on the real estate market in APAC could be substantial, with the potential for increased asset valuation and heightened investor interest in the region.

MIAMI, March 19, 2024 /PRNewswire/ -- Starwood Capital Group ("Starwood Capital" or "the Firm"), a leading global private investment firm focused on real estate, today announced that a controlled affiliate has agreed to acquire a 10.7% equity stake in ESR Group ("ESR" or "the Company") in a structured transaction alongside ESR Co-Founders, Stuart Gibson and Charles de Portes ("the co-Founders"). Mr. Gibson will remain Co-Chief Executive Officer and an Executive Director of the Company and Mr. Portes will remain a Non-Executive Director of the Company. Pursuant to the acquisition, all of the outstanding sums under the existing margin loan facility of the holding vehicle of the co-Founders will be fully extinguished.

ESR Group is APAC's largest real asset manager. With approximately $156 billion in total assets under management focused on the new economy sectors of logistics, data centres and alternatives, the Company has a fully integrated development and investment management platform extending across key APAC markets, including Australia, Japan, South Korea, China, Southeast Asia and India.

Barry Sternlicht, Chairman and CEO of Starwood Capital, commented: "ESR is the leading real estate platform in Asia Pacific with important market positions in logistics and data centres, which are key growth areas for Starwood Capital. I have known Stuart for many years and have always been impressed by the business he, Charles and co-CEO Jeffrey Shen have built. Having recently partnered with ESR in Australia, we are very pleased to expand and strengthen our relationship through this transaction. We have full faith and confidence in the management team and look forward to working with all stakeholders over the longer-term."

Stuart Gibson, Executive Director, Group Co-Founder & Co-CEO, ESR Group, added: "I have known Barry for nearly 20 years and I look forward to partnering with Starwood Capital as an investor. We believe Starwood Capital's support will allow ESR to continue to focus on delivering for our customers, shareholders and capital partners."

Jeffrey Perlman, Non-Executive Chairman, ESR Group, commented: "We are very pleased to welcome Starwood Capital as a key shareholder and partner of ESR Group. Starwood Capital's scale, global track record in public and private real estate and access to capital is highly complementary to the Company's strategy. We believe this is a strong vote of confidence in ESR and its prospects going forward."

About Starwood Capital Group

Starwood Capital Group is a private investment firm with a core focus on global real estate. The Firm and its affiliates maintain 16 offices in seven countries around the world, and currently have 5,000+ employees. Since its inception in 1991, Starwood Capital Group has raised over $75 billion of capital, and currently has ~$115 billion of assets under management. Through a series of comingled opportunity funds and Starwood Real Estate Income Trust, Inc. (SREIT), a non-listed REIT, the Firm has invested in virtually every category of real estate on a global basis, opportunistically shifting asset classes, geographies and positions in the capital stack as it perceives risk/reward dynamics to be evolving. Starwood Capital also manages Starwood Property Trust (NYSE: STWD), the largest commercial mortgage real estate investment trust in the United States, which has successfully deployed over $95 billion of capital since inception and manages a portfolio of over $27 billion across debt and equity investments. Over the past 32 years, Starwood Capital Group and its affiliates have successfully executed an investment strategy that involves building enterprises in both the private and public markets. Additional information can be found at www.starwoodcapital.com.

About ESR Group

ESR is APAC's largest real asset manager powered by the New Economy and the third largest listed real estate investment manager globally. With approximately US$150 billion in total assets under management (AUM)¹, our fully integrated development and investment management platform extends across key APAC markets, including China, Japan, South Korea, Australia, Singapore, India, New Zealand and Southeast Asia, representing over 95% of GDP in APAC, and also includes an expanding presence in Europe and the U.S. We provide a diverse range of real asset investment solutions and New Economy real estate development opportunities across our private funds business, which allow capital partners and customers to capitalise on the most significant secular trends in APAC. ESR is the largest sponsor and manager of REITs in APAC with a total AUM of approximately US$45 billion. Our purpose – Space and Investment Solutions for a Sustainable Future – drives us to manage sustainably and impactfully and we consider the environment and the communities in which we operate as key stakeholders of our business. Listed on the Main Board of The Stock Exchange of Hong Kong, ESR is a constituent of the FTSE Global Equity Index Series (Large Cap), Hang Seng Composite Index and MSCI Hong Kong Index. For more information on ESR, please visit www.esr.com 

Media Contacts

For Starwood Capital Group
Tom Johnson, Dan Scorpio or Emma Prenn-Vasilakis, H/Advisors Abernathy
tom.johnson@h-advisors.global, dan.scorpio@h-advisors.global or emma.prenn-vasilakis@h-advisors.global

For ESR Group
Media Relations: Kathleen Goh, Senior Director, Group Corporate Affairs (kathleen.goh@esr.com)
Investor Relations: Marilyn Tan, Group Head, Investor Relations (marilyn.tan@esr.com)

^{________________________
1} As at 31 December 2023.

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SOURCE Starwood Capital Group

FAQ

What percentage of equity stake did Starwood Capital Group acquire in ESR Group?

Starwood Capital Group acquired a 10.7% equity stake in ESR Group.

Who will remain Co-Chief Executive Officer of ESR Group after the acquisition?

Stuart Gibson will remain Co-Chief Executive Officer of ESR Group.

What sectors are ESR Group's assets under management focused on?

ESR Group's assets under management are focused on logistics, data centres, and alternatives.

What is the total value of assets under management for ESR Group?

ESR Group has approximately $156 billion in total assets under management.

Who is the Chairman and CEO of Starwood Capital?

Barry Sternlicht is the Chairman and CEO of Starwood Capital.