Brook­field to ac­quire ICICI tower?

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

MUMBAI Canada’s Brook­field As­setMan­age­men­tInc. is in fi­nal stages of dis­cus­sions with­pri­vate sec­tor lender ICICI Bank Ltd to ac­quire the ICICI Tower in Hyderabad, two peo­ple aware of the devel­op­ment said.

Brook­field is on the verge of sign­ing the deal for the prop­erty sit­u­ated in Gachi­bowli fi­nan­cial dis­trict, said one of the two per­son­son­the­con­di­tiono­fanonymity. “Brook­field has com­pleted the duedili­gence and­some­ofthe trans­fer pro­ce­dure­sarepend­ing. The deal may be signed in a cou­ple of weeks’ time,” said the sec­ond per­son. The 1.2 mil­lion sq. ft build­ing is val­ued at around Rs1,000-1,200 crore, ac­cord­ing to the sec­ond per­son.

Brook­field, which owns $250 bil­lion of as­sets world­wide, has been on an ex­pan­sion spree in In­dia with mul­ti­ple buy­outs in the re­cent past. In Jan­uary, it agreedto ac­quire the 1.25 mil­lion sq. ft Equinox Busi­ness Park at Ban­dra-KurlaCom­plex(BKC) in Mumbai from Es­sar Group for aboutRs2,400crore. In2016, it had signed one­ofIn­dia’s largest com­mer­cial real es­tate deals by ac­quir­ing the of­fice and re­tail as­sets of Hi­ranan­dani De­vel­op­ers Pvt. Ltd for close to $1 bil­lion.

Mailssent­tospokesper­son­sat ICICI Bank and Brook­field went unan­swered. Hyderabad turns out to be a much sought-af­ter of­fice space for sev­eral global multi­na­tional com­pa­nies af­ter Bengaluru and Chennai.

Ap­pleInc. haden­teredHy­der­abadin2016byleas­ing2.5lakhsq. ft, whileother­s­like Ama­zon.com Inc. and Mi­crosoft Corp. have leased large of­fice spa­ces in the city. Ac­cord­ing to data com­piled by prop­erty ad­vi­sor JLL In­dia, Hyderabad, which saw a rental growthof6.8% in 2017, is likely to touchthe2008­peakinthe­com­ing quar­ters. “Hyderabad to­day is one of the fastest grow­ing mar­kets and is in a catch-up­mode on the pace of both con­struc­tion as well as leas­ing, for the last few quar­ters af­ter the po­lit­i­cal sta­bil­ity achieved­fromthes­plit(in two states),” said Shashank Jain, part­ner and leader (real es­tate deals) at PwC In­dia. While there have been some head­winds for the IT/ITES sec­tor in the re­cent times, it has not yet ad­versely im­pacted the de­mand for of­fice space in In­dia, headded. GradeA sup­ply­inHy­der­abad­of­fices­pace to­tal­ing around 5.8 mil­lion sq. ft was recorded dur­ing 2017, an in­crease of 47.0% com­pared to 2016, ac­cord­ing­totheCush­man& Wake­field­De­cem­ber2017re­port.

“Owing to the lim­ited avail­abil­ity of Grade A space ex­pected in the first half of 2018, rentals are an­tic­i­pated to rise steadily in the Mad­ha­pur and Gachi­bowli sub­mar­kets. We ex­pect that strong de­mand and tight va­cancy rates will tilt the mar­ket in favour of land­lords for the next few quar­ters,” it added. Sev­eral in­vestors are set to exit from their in­vest­ments in Hyderabad against the back­drop of in­creas­ing de­mand.

An­other Hyderabad-based of­fice prop­erty WaveRock, spread­over2.5mil­lionsq. ft inthe Gachi­bowli­fi­nan­cial dis­trict, has been­pu­ton­the­block­by­itsin­vestors Sin­ga­pore’s sov­er­eign wealth­fundGICPte. Lt­dandNew York-based de­vel­oper Tish­man Speyer, Mint re­ported in Jan­uary. In 2017, the of­fice sec­tor wit­nessed amas­sive­jumpin­in­vest­ments to Rs13,200 crore from Rs4,000cror­ein2016, ac­cord­ingto aCush­manandWake­field­Jan­uary 2018 re­port. The jump in in­flows came on the back of a three-fold rise in in­vest­ment in of­fice seg­ment, sig­nalling height­ened in­ter­est of in­sti­tu­tional in­vestors in pre-leased of­fice.

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