ESR divests ARA Private Funds for $359m

The divestment of ARA private funds is part of ESR’s divestment lineup worth $998m.

ESR announced the divestment of ARA Private Funds (AFP) business in Australia, Singapore, South Korea, and the USA to entities under Sumitomo Mitsui Finance and Leasing Co for an agreed enterprise value of $359m (US$270m).

The divestment is expected to yield $386m (US$290m) of net proceeds which will be used primarily to reduce the company’s debt.

The divestment of AFP is part of the company’s lineup of non-core businesses to be divested, totalling $998m (US$750m). 

As part of the deal, 22 funds are being divested, representing US$9.8b in AUM with nearly 100% of the assets in these funds sitting outside of ESR’s core New Economy focus.

ESR LOGOS REIT is not part of the transaction and the remaining ARA-branded vehicles will be rebranded to ESR.

The calculation of the purchase price is referred to their net asset value and a market valuation for the funds' management platform. The transaction is subject to regulatory and other conditions to be completed by Q32024.