Cap­i­ta­Land, Xan­der vie for IT parks

HT Estates - - HTESTATES - Reghu Balakr­ish­nan reghu.b@livemint.com

prime rental as­set class.

Black­stone de­clined to com­ment on its In­dia port­fo­lio and strat­egy.

Jitu Vir­wani, chair­man and man­ag­ing di­rec­tor, Em­bassy Group, one of Black­stone’s first de­vel­oper part­ners here, said Black­stone has deep un­der­stand­ing of the real es­tate busi­ness in In­dia, in­clud­ing the ap­proval process and other le­gal­i­ties.

In July 2017, Em­bassy Of­fice Parks real es­tate in­vest­ment trust (REIT) was regis­tered with the Se­cu­ri­ties and Ex­change Board of In­dia (Sebi), mak­ing it the first such re­alty trust in the coun­try to be ac­corded reg­is­tra­tion by the mar­ket reg­u­la­tor. The draft red her­ring prospec­tus is ex­pected be filed be­fore Mayend.

“The REIT will see Black­stone step­ping in as a spon­sor and will see them mon­etis­ing part of their com­mer­cial port­fo­lio and re­al­iz­ing its value,” Vir­wani said.

Em­bassy Of­fice Parks, which in­cludes Em­bassy Many­ata Busi­ness Park and Em­bassy GolfLinks in Ben­galuru, is an i nvest­ment part­ner­ship be­tween Em­bassy Group and Black­stone, along with other stake­hold­ers. Glob­ally, Black­stone has around $115 bil­lion of as­sets un­der man­age­ment and in Fe­bru­ary, Ken Ca­plan and Kath­leen McCarthy were named as global co-heads of real es­tate. Se­nior man­ag­ing part­ner Tuhin Parikh has built the firm’s real es­tate in­vest­ment port­fo­lio in In­dia from the start. From build­ing an of­fice as­set base, Black­stone started buy­ing shop­ping malls in 2015 and set up its In­dia sub­sidiary Nexus Malls in 2016 to own and man­age the malls here.

Be­tween 2017 and now, Nexus Malls has in­creased its port­fo­lio from 2.8 mil­lion sq. ft to 5 mil­lion sq. ft across eight malls.

De­spite the on­go­ing slow­down in the res­i­den­tial sec­tor, the com­mer­cial real es­tate space has seen un­abated in­ter­est from mar­que global in­vestors.

JLL In­dia in Fe­bru­ary es­ti­mated that net ab­sorp­tion of of­fice space to cross 100 mil­lion sq. ft by end of 2020 in the top eight cities of In­dia.

“The of­fice space mar­ket has been ex­pe­ri­enc­ing ro­bust de­mand trends which will be fruc­ti­fied in the next 2 -3 years keep­ing the of­fice leas­ing ac­tiv­i­ties buoy­ant and in an up­ward move­ment,” it said.

In com­mer­cial real es­tate, Black­stone has faced com­pe­ti­tion from Sin­ga­pore’s sov­er­eign wealth fund GIC Pte. Ltd, with both of them of­ten vy­ing for the same deals.

Ac­cord­ing to an­a­lyst esti- mates, GIC has in­vested more than $3.5 bil­lion in of­fice, res­i­den­tial and shop­ping malls. In a sin­gle in­vest­ment, last year, pro­mot­ers of DLF sold their 33.34% stake in its rental arm to GIC for around Rs8,900 crore.

“The key dif­fer­ent be­tween GIC and Black­stone would be the op­er­a­tional ex­per­tise of the lat­ter and the strong part­ner­ships it has forged,” said an in­vestor, re­quest­ing not to be named.

“Black­stone was clearly an early mover which saw the po­ten­tial in com­mer­cial real es­tate ahead of its time. What now needs to be seen is how well they mon­e­tise these as­sets. But in­vest­ments by the likes of Black­stone have sent out the mes­sage loud and clear to other global in­vestors that in­vest­ing in In­dia is a long haul and one needs to be pa­tient and fo­cused,” said Shashank Jain, part­ner, trans­ac­tion ser­vices, PwC In­dia. MUM­BAI: Sin­ga­pore-bas­edlead­ing real es­tate com­pa­nyCap­i­taLand Ltd and global in­vest­ment firm The Xan­der Group Inc. are the front run­ners to ac­quire Punebased IT Parks, which is owned by US fund The Black­stone Group, said two peo­ple aware of the devel­op­ment.

Black­stone has put its BlueRidge spe­cial eco­nomic zone (SEZ) an­dan­oth­erITSEZinHin­je­w­adi area of Pune on sale, and hired Mor­gan Stan­ley to find a buyer. The deal will be in the range of Rs2,000 crore, said the first per­son. Oth­ers who have joined in the race in­clude Shapoorji Pal­lonji-Al­lianz and Sin­ga­pore-based in­vestor-de­vel­oper As­cen­das- Singbridge. The 1.5-mil­lion-sq. ft BlueRidge spe­cial eco­nomic zone (SEZ) was ac­quired from pri­vate eq­uity fund­man­agerIDFCAl­ter­na­tives in 2014, while the other SEZ— jointly de­vel­oped by DLF and Hubtown (erst­while Ack­ruti City)—was ac­quired by Black­stone for Rs810 crore in 2011.

Cap­i­ta­Land, one­ofAsia’slargest real es­tate com­pa­nies, owns and man­aged a global port­fo­lio worth­morethanS$88 bil­lion ($67 bil­lion) as of 31 De­cem­ber 2017, com­pris­ing in­te­grated de­vel­op­ments, shop­ping malls, ser­viced res­i­dences, of­fices, homes, real es­tate in­vest­ment trusts (REITs) and funds, ac­cord­ing to the com­pany web­site.

In In­dia, Cap­i­taLan­d­op­er­ates sev­enser­vice­dres­i­den­ce­prop­er­ties in Ben­galuru, Gu­ru­gram, Chen­na­iandAhmed­abad­whileit ownst­wom­a­llsinJa­land­ha­rand Nag­pur.

In Jan­uary, Cap­i­ta­Land had sold its stake in six malls across In­dia to Ben­galuru based de­vel­oper Pres­tige Group for Rs324 crore. Pres­tige Group had ac­quired Cap­i­ta­Land’s stake in spe­cial pur­po­seve­hi­cles(SPVs) it had­formed­be­tweent­wopar­ties.

Sim­i­larly, global in­vest­ment firm Xan­der Group Inc., which has in­vested around $2 bil­lion in In­dia’s real es­tate sec­tor, has made mul­ti­ple buy­outs re­cently as part of ex­pand­ing its com­mer­cial of­fice port­fo­lio inthe­coun­try.

It had­bough­tanof­fice­build­ing of around 250,000 sq. ft at Em­bassy Golf Links Busi­ness Park in Ben­galuru for Rs350 crore last month. In 2017, Xan­der group and Dutch pen­sion fund as­set man­ager APG As­set Man­age­ment NVbough­tan­in­for­ma­tion tech­nol­ogy SEZ in south Chen­nai for around $350 mil­lion (Rs2,250 crore) from Shri­ram Prop­er­ties. B. V. Bharad­waja, Group­coun­try­head, In­dia, Cap­i­ta­Land In­ter­na­tional said, “We are con­stantly on­th­elook­out for op­por­tu­ni­ties to ex­pandour­p­res­ence in In­dia and will not com­ment on spec­u­la­tion in the mar­ket.” Spokesper­sons at Black- stone, Mor­gan Stan­ley de­clined to com­ment while mails sent to Xan­der went unan­swered. Though in­vestors are keep­ing awayfrom­res­i­den­tial­realestate, of­fices re­mains a hot real es­tate in­vest­ment des­ti­na­tion in In­dia.

In 2016, Canada-based Brook­field As­set Man­age­men­tInc. had ac­quired 5 mil­lion sq ft of com­mer­cial prop­erty from the Hi­ranan­dani group for $1 bil­lion (Rs6,500 crore), in oneof the largest buy­outsin­com­mer­cial­re­alty space. Withthede­mand­fo­rof­fice space in­creas­ing, the av­er­age of­fice space to be ab­sorbed in top In­dian cities is ex­pected to be at 40-45 mil­lion sq. ft per year un­til 2020, ac­cord­ing to a Cush­man & Wake­field 2017 re­port.

“Com­mer­cialof­fi­ce­realestate is ex­pected to see greater par­tic­i­pa­tion of for­eign in­sti­tu­tional in­vestors as­th­ey­con­tin­ue­topick up leased and un­der-con­struc­tion as­sets in In­dia,” said the re­port - Com­mer­cial Of­fice Real Es­tate: Pos­i­tive Dis­rup­tions- Bea­cons of Change.

The in­vest­ment sce­nario is now­marked­by­a­com­bi­na­tionof sov­er­eign/pen­sion funds with a long-term in­vest­ment fo­cus, along with pri­vate eq­uity funds that have a typ­i­cal 7-8 years in­vest­ment hori­zon. This is lead­ing to a marked shift in own­er­ship pat­tern with in­sti­tu­tional in­vestors now be­ing amongst some of the largest own­ers of of­fice as­sets, it added.

BLOOMBERG

In 2018, Black­stone is also set to buy an 80% ma­jor­ity stake in Nitesh Hub, a shop­ping mall in Kore­gaon Park, Pune

BLOOMBERG

Black­stone has put its BlueRidge spe­cial eco­nomic zone on sale

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