Dutch pension-fund manager APG Investments Asia Ltd. (APG) and Singapore-based real estate firm CapitaLand Investment Ltd. (CLI) have formed a joint venture to acquire and expand Extra Space Asia (ESA), a privately owned self-storage operator with 73 facilities across six Asian nations. The partners will buy ESA for S$570 million, with the expectation to grow the investment to S$1.14 billion to fuel growth across the Asia-Pacific region. APG will own 90% of ESA, with CLI holding a 10% stake, according to a press release.
The ESA portfolio comprises more than 1 million square feet across Hong Kong, Japan, Malaysia, Singapore, South Korea and Taiwan. Once the transaction closes, the new owners are expected to retain ESA’s management team, though the business will be reorganized into separate property and operating companies to help scale the operation going forward, a source reported.
“The self-storage sector is ideally accessed at scale and with local execution capability. This new partnership immediately offers us both,” said Graeme Torre, head of real estate for APG. “On behalf of our pension-fund clients, we are delighted to be partnering with CLI and the ESA team to expand this platform throughout the Asia region. This asset class is fully aligned with the theme of urbanization, which has been one of our core investment beliefs for many years and is a key tenet of our environmental performance aspirations.”
“Self-storage is one of the alternative asset classes that has remained impressively resilient during the pandemic and looks set to continue benefitting from strong growth tailwinds supported by favorable demographics and lifestyle trends in Asia,” said Patrick Boocock, CEO of private-equity alternative assets and real assets for CLI. “This is an opportune time to enter the emerging sector with a new platform that will augment CLI’s funds under management and fee-related earnings. We view the self-storage platform as an extension of CLI’s logistics platform, well-positioned to capture the increasing demand for flexible storage and last-mile delivery requirements in tandem with the growth of e-commerce.”
ESA achieved S$48.38 million in revenue last year, though 62% was attributed to its Singapore footprint, which is the company’s largest at 583,362 square feet. The company’s net operating income in 2021 was S$24.3 million, which company officials predict will increase 33.7% to S$32.5 million by 2025, according to a source.
Founded in 2007, ESA operates 37 self-storage facilities in Taiwan, 11 each in Singapore and Japan, seven in South Korea, five in Malaysia and two in Hong Kong.
Based in the Netherlands, APG manages €558 billion in assets for pension funds representing 4.8 million participants, according to its website. Its team of more than 700 investment professionals is spread across offices in Belgium, China, Hong Kong, the Netherlands and the United States.
Founded in 2002, CLI is the real estate investment manager of CapitaLand Group. Its diversified real estate interests include business parks, data centers, hospitality, logistics, office and retail in Asia, Europe and the United States. The ESA transaction marks a return to the self-storge industry for the company, which sold its interest in the StorHub self-storage brand in Asia in 2019.
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