Xander buys office asset in Bengaluru
BENGALURU: Xander Group Inc. has bought an office building of around 250,000 sq. f t at Embassy Golf Links Business Park in Bengaluru for Rs350 crore from Sanjay Ghodawat Group.
The acquisition has been made from Xander’s India office platform and is in line with the global investment firm’s plans to expand its commercial office portfolio in the country.
The office building, Pinehurst, is fully leased out to Fidelity India.
“Xander’s office platform in India is currently valued at around $ 500 million and this acquisition is a good value-add to the portfolio. Xander is looking to further expand the portfolio and has a strong pipeline of acquisitions which are of course subject to due diligence,” said a person directly familiar with the transaction, who did not wish to be named.
Sanjay Ghodawat, chairman of the eponymous firm, said it was a strategic sale which now enables the firm to rebuild its real estate portfolio to 2 million sq. ft of pre- leased properties across India in the next three years, with newer assets and better financial returns.
Colliers was exclusively mandated by the Ghodawat Group to execute the sale process. A Xander spokesperson didn’t respond to queries.
Sanjay Ghodawat Group, which is into businesses in sectors such as aviation, education and consumer goods, bought the building in Embassy Golf Links in 2003.
“We i ntend t o now buy stressed office assets and regrow our real estate asset base. We want to use this capital ( from the transaction) to expand our business and also to build a new portfolio of office assets,” said Shrenik Ghodawat, director, Sanjay Ghodawat Group.
Xander has been expanding aggressively for a while now, both in the office and shopping mall space.
In Chennai, it currently owns a 600,000 sq. f t office building.
In 2017, Xander group and Dutch pension fund asset manager APG Asset Management NV bought an information technology ( IT) special economic zone ( SEZ) i n south Chennai for around $ 350 million ( Rs2,250 crore) from a joint venture of Shriram Properties’ and Infrastructure Pvt. Ltd and private equity fund SUN- AREA Property Partners.
I n 2014, Xander and an investor consortium led by APG said they were setting up a $ 300 million venture to buy income- generating, institut i onal- grade commercial assets across India’s main markets.
Over time, if buying opportunities continued to emerge, the venture’s size would be increased to $ 500 million.
In December, Rohan Sikri, senior partner, Xander Investment Management Pte Ltd, the real estate private equity arm of Xander Group, said that the firm has around 6 million sq. ft of office space in its portfolio.
“Apart from this, we have a strong pipeline of acquisitions that are currently under diligence, approximately 8 million sq. ft, where we plan to invest $ 350 million i n the next 12 months,” Sikri had said.
India’s residential real estate business may be reeling under the effect of a prolonged slowdown, but that has not deterred global investors from investing in the office space.
Gagan Randev, national director, capital markets and investment services, Colliers International India said, “We received strong interest from a host of bidders which clearly underlines that international and domestic funds and institutions are aggressively looking at acquiring Grade A preleased office assets.” Due to a lull in the real estate market since last few years, there has been a price correction in many areas, especially those where the property prices had risen exponentially during the property boom.
So severe was the price correction that in some localities, the property prices even went below the circle rate.
A circle rate is the minimum property rate defined by the government for specified areas.
Even if a property is sold at below the circle rate, the stamp duty, registration value and the capital gain would be calculated on the circle rate, and not the actual sale price.
For instance, in some areas of Delhi, like Maharani Bagh and New Friends Colony, the per square metre circle rate is Rs7.74 lakh, while the prevailing market rate is below Rs6 lakh.
Similarly, even after a few cuts in the circle rates during
EVEN IF A PROPERTY IS SOLD AT BELOW THE CIRCLE RATE, THE STAMP DUTY, REGISTRATION VALUE AND THE CAPITAL GAIN WOULD BE CALCULATED ON THE CIRCLE RATE