APG boosts logistics portfolio with $400m Korea fund investment
APG Asset Management is making a strategic expansion in the Asia Pacific logistics sector, with a significant investment into the ESR Korea Logistics Core Fund, South Korea's first perpetual open-ended logistics fund.
This investment by APG, which exceeds $400 million, underscores the growing importance of logistics in global investment portfolios, particularly in the resilient markets of Asia that are buoyed by the e-commerce boom as well as supply chain optimisation trends.
“APG has been a major investor in the logistics sector globally and in Asia. It currently represents one of the highest exposures in our APAC real estate portfolio — a result of our long-term conviction to the sector,” Graeme Torre, APG's head of real estate in Asia-Pacific, told AsianInvestor.
The ESR Korea Logistics Core Fund’s open-end structure type also facilitates a growing preference that is increasingly resonating with asset owners who value liquidity and flexibility.
“An open-ended core fund that provides a long-term exposure with an ability to continually refresh the portfolio fits very well with our mandate," said Torre.
Open-ended funds benefit from being perpetual, and offer a more flexible liquidity mechanism that can cater to different investors’ needs, he said.
“This can attract a wider pool of investors, which in turn creates a larger fund size, enabling the vehicle to diversify and when combined with the continuous term, allows the quality of the portfolio to be maintained at the highest level,” said Torre.
ESG FOCUS
The €569-billion ($615 billion) Dutch pension investor’s approach is not just about financial returns; it also incorporates strong environmental, social, and governance (ESG) principles.
APG views itself as a driving force in innovative investment solutions and ESG leadership, and remains committed to steering sustainable and resilient real estate investments throughout the Asia Pacific region, according to Torre.
"APG has a set of requirements that apply to all real estate investments that include the adoption of policies that cover bribery and corruption, fair working practices, modern slavery, and human rights as well environmental management,” said Torre.
APG also requires ‘whole building’ energy and greenhouse gas data to be provided on a regular basis, he said.
The fund's commitment to achieving Leadership in Energy and Environmental Design (LEED) Certification and its high scores under the GRESB reporting framework demonstrate APG's dedication to sustainable investing.
A NEW TREND
The open-ended fund structure is also transforming the approach of asset owners in Asia’s private credit scene.
As recently reported by AsianInvestor, this trend is especially prominent in Singapore, which has become a catalyst for change, supported by initiatives from the Monetary Authority of Singapore (MAS) and the city-state's conducive business environment.
Asset owners across Asia, who traditionally faced longer lock-in periods, are now driving the demand for open-ended private credit funds that offer more frequent redemption opportunities.
These new structures are a departure from the conventional closed-end models, reflecting the changing preferences of today's investors.
The pivot to open-ended funds is also in part due to a reaction to stricter banking regulations and the pursuit of higher returns, factors that have rendered private credit an attractive asset class.
Recognising the diverse needs of Asia's investor community, fund managers are increasingly developing offerings that provide the desired liquidity and investment control.