Financial Statements and Related Announcement::Half Yearly Results

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ESR CAYMAN LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1821)

ANNOUNCEMENT OF INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 JUNE 2021

The board of directors (the "Board" and the "Directors" respectively) of ESR Cayman Limited (the "Company" or "ESR") is pleased to announce the unaudited interim condensed consolidated results of the Company and its subsidiaries (collectively the "Group") for the six months ended 30 June 2021 (the "Period" or "1H2021") together with the comparative figures for the six months ended 30 June 2020 ("1H2020"), as follows:

FINANCIAL HIGHLIGHTS

	1H2021	1H2020	Year-on-Year
	(Unaudited)	(Unaudited)	Change*
Key financial performance	US$'000	US$'000	%
204,399
Revenue		197,641		3.4
Profit for the period	229,695		144,656		58.8
EBITDA(i)	373,450		269,426		38.6
Adjusted EBITDA(i)	214,812		151,007		42.3
PATMI	213,947		132,993		60.9
Core PATMI(i)	166,940		121,204		37.7
Revenue by country	58,089
China		43,727		32.8
Japan	61,615		35,146		75.3
South Korea	22,459		18,667		20.3
Singapore	12,638		11,252		12.3
Australia#	46,267		84,915		(45.5)
India	3,331		3,934		(15.3)
	204,399		197,641		3.4

• Includes construction revenue.

• Year-on-Year("YoY") Change % represents a comparison between the first half of current year and the first half of last year.

1. EBITDA, Adjusted EBITDA and Core PATMI are non-IFRS measures. EBITDA is calculated as profit before tax, adding back depreciation and amortisation and finance costs (net). Refer to Non-IFRS measures in page 15 for calculations of Adjusted EBITDA and Core PATMI.

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OPERATIONAL HIGHLIGHTS

The following table summarises Asset Under Management ("AUM") and Gross Floor Area ("GFA") held on Group's balance sheet and in the funds and investment vehicles that the Group managed as of 30 June 2021, 31 December 2020 and 30 June 2020, respectively:

				AUM					GFA
	30 June	31 December	30 June		30 June	31 December	30 June
Country	2021	2020		2020	2021	2020			2020
			(US$'millions)			(sqm in thousands)
China	7,380		6,744		6,073	8,946	8,492			7,636
Japan	9,224		7,877		7,982	3,632	3,544			3,350
South Korea	9,441		7,734		7,198	3,686	3,501			3,315
Singapore	3,047		2,974		2,841	1,839	1,786			1,786
Australia	6,094		3,386		1,993	3,018	1,361			1,116
India	1,142		1,165		451	1,433	1,426			1,461
Indonesia	17			N/A	N/A	70		N/A	N/A
	36,345		29,880		26,538	22,624	20,110			18,664

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MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

ESR has continued its strong momentum and delivered outstanding performance during the six months ended 30 June 2021 ("1H2021"). The Covid-19 pandemic continues to accelerate the growth of e-commerce where ESR sits at the heart of the central nervous system delivering the core New Economy infrastructure to its best-in-class clients. ESR's strong financial results and operational excellence have demonstrated not only the Group's resilience, but also the strength and power of its business model.

Revenue (excluding construction revenue) for 1H2021 was US$177.7 million, up 24.7% from US$142.4 million in 1H2020. EBITDA increased by 38.6% from US$269.4 million in 1H2020 to US$373.5 million in 1H2021. Fund Management EBITDA recorded accelerating growth with a 50.9% year-on-year increase from US$64.4 million in 1H2020 to US$97.1 million in 1H2021. Net profit attributable to the owners of the Company ("PATMI") grew 60.9% from US$133.0 million in 1H2020 to US$213.9 million in 1H2021. Higher PATMI was driven by the growth in the Group's co-investments in funds, associates, and joint ventures, as well as lower borrowing costs. This is in line with ESR's asset light strategy and disciplined capital management.

Having witnessed sustained strong capital inflows and leasing demand, the logistics market has solidified its position as the preferred real estate asset class in Asia. It is expected that e-commerce acceleration and supply chain transformation will continue to benefit ESR as it extends the platform deeper into existing markets as well as new markets over the next 12 months.

Accelerating growth of Fund Management segment

ESR's Fund Management segment achieved stellar performance in 1H2021 with revenue surging 48.2% to US$123.9 million, buoyed by various key drivers including: the continued growth in the Group's fund AUM which rose 37.9% year-on-year to US$32.7 billion; the robust development work-in-progress ("WIP") (in funds) which reached a record US$5.5 billion; and strong leasing activity with over 1.6 million sqm of space leased across portfolio.

Supported by its well-established fund management platform, together with the continued acceleration in fundraising momentum, the Group's total AUM continued to grow, reaching US$36.3 billion, up 36.9% year-on-year.

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The Group continues to see strong capital flows into logistics as global institutional investors are seeking to strategically rebalance their portfolios. Underpinned by the strong capital partner relationships and track record ESR has built over the years, the Group raised US$2.5 billion in committed capital via new and/or upsized vehicles across Japan, South Korea and Australia.

• JPY75 billion (approximately US$675 million) expansion of ESR Japan Logistics Fund III ("RJLF3") with APG and another global institutional investor;
• US$500 million upsized investment with CPP Investments in the Korea Income Joint Venture; and
• A$1.3 billion (approximately US$1.0 billion) investment partnership with GIC for a newly formed investment vehicle, EMP, for the Milestone Portfolio acquisition in Australia.

The A$3.8 billion (approximately US$2.9 billion) acquisition of the Milestone Portfolio and its management platform, which was completed in June 2021, marks the largest-ever logistics property transaction in Australia. The acquisition represents a 80% uplift in ESR Australia's AUM, which is now valued at US$6.1 billion, and positions ESR as the third largest logistics and industrial owner in the country, within three years of entering the Australian market.

Fundraising momentum remains strong as the Group continues to deepen its relationships with new and existing capital partners. As of 30 June 2021, the Group had over US$4.4 billion worth of committed but uncalled capital to invest in new projects going forward.

Robust development activities and leasing performance

ESR has over 19.7 million sqm of GFA in operation and under development across its portfolio and a landbank of over 2.9 million sqm, as of 30 June 2021. Its Asia Pacific ("APAC") wide portfolio achieved outstanding performance across multiple fronts, from new development starts to leasing.

Development demand remained robust with WIP growing by 57% to a record US$5.5 billion in 1H2021. The Group achieved US$1.2 billion worth of development starts (vs US$0.8 billion in 1H2020) and US$0.9 billion in development completions during the period.

ESR owns one of the largest development pipelines in the region, totalling over 16.1 million sqm across its portfolio. It will continue to leverage third-party capital to fund development starts and exercise a disciplined asset light approach to achieve its targeted development completions.

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In addition to strengthening its market leadership position in core markets, the Group has also sought to expand its footprint in Southeast Asia, one of the fastest growing regions in the world.

In May 2021, the Group entered the Vietnamese market via a joint venture with the leading local logistics and industrial developer and operator, BW Industrial, to develop a 240,000 sqm project in Binh Duong, a major industrial development hub in southern Vietnam.

E-commerce acceleration and supply chain resilience have spurred demand for modern, institutional-grade logistics facilities, driving the solid performance of ESR's leasing activities. The Group maintained a healthy occupancy rate of 89% across its entire portfolio1, and achieved record leasing of over 1.6 million sqm of space.

Strong balance sheet and continued asset light trajectory

As of 30 June 2021, ESR has a robust and well-capitalised balance sheet with US$1.1 billion in cash, and net debt over total assets of 30.6%.

ESR continues to expand and diversify its funding and capital structure, which is crucial for fuelling the Group's long-term growth. In April 2021, it entered into a US$400 million (with a US$100 million incremental option) unsecured term loan facility which consists of a three-year tranche of US$267 million at Libor plus 2.75% and a five-year tranche of US$133 million at Libor plus 3.25%. There were 10 banks participating in the new facility which included both international and Asian financial institutions. In March 2021, ESR issued S$200 million (approximately US$148.6 million) NC5 fixed rate perpetual resettable step-up subordinated securities at a distribution rate of 5.65% ("Perpetual Securities NC5 5.65%") under its US$2.0 billion Multicurrency Debt Issuance Programme. In June 2021, ESR issued a further tranche within the Perpetual Securities NC5 5.65% amounting to S$150 million (approximately US$111.6 million), bringing the aggregate total amount to S$350 million (approximately US$260.2 million).

The Group continues its asset light approach focusing on active recycling of capital to scale its business platform for future growth.

In May 2021, ESR-REIT embarked on its maiden overseas acquisition outside Singapore by taking a 10% stake in ESR Australia Logistics Partnership ("EALP"), which is an existing Australian core fund managed by ESR's Australian platform. This transaction also marks ESR-REIT's first acquisition from the Group's APAC pipeline.

1Based on stabilised assets on balance sheet as at 30 June 2021

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