Black­stone, In­di­a­b­ulls plan com­mer­cial real es­tate plat­form

The two firms plan to add six of­fice spa­ces on the new re­alty plat­form

HT Estates - - FRONT PAGE - Mad­hurima Nandy mad­

BEN­GALURU: Barely three months af­ter strik­ing a joint ven­ture, pri­vate equity (PE) firm Black­stone Group Lp and In­di­a­b­ulls Real Es­tate Ltd ( IBREL) plan to de­velop it into a com­mer­cial prop­er­ties plat­form with ren­tyield­ing as­sets, said one per­son fa­mil­iar with the de­vel­op­ment.

The plan is to add six of­fice as­sets on the plat­form within the next three to six months, of which three will be jointly ac­quired and the re­main­ing would­com­prise projects al­ready be­ing de­vel­oped by IBREL.

“The prop­er­ties are go­ing to beinMum­ba­iandNCR(Na­tional Cap­i­tal Re­gion) and the idea is to bring as­sets with an­nu­ity in­come­un­der the joint ven­ture,” the per­son said, re­quest­ing anonymity.

In March, Black­stone had bought a 50% stake in IBREL’s of­fice prop­er­ties, One In­di­a­b­ulls and In­di­a­b­ulls Fi­nance Cen­ter, in cen­tral Mum­bai for $730 mil­lion (₹ 4,750 crore).

IBREL will not pur­sue its ear­lier plan to carve out a sep­a­rate en­tity for its com­mer­cial of­fice busi­ness, given its new part­ner­ship with Black­stone. In 2017, the com­pany’s board had de­cided to cre­ate anewver­ti­cal to house the two busi­nesses, where the res­i­den­tial busi­ness would con­tinue to re­main with IBREL and the new en­tity—In­di­a­b­ulls Com­mer­cial As­sets Ltd (IBCAL)— would hold ex­ist­ing leas­ing and com­mer­cial as­sets, as well as fu­ture projects.

“In­stead of IBCAL, the plat- form with Black­stone will house the of­fice as­sets. In­vest­ment de­ci­sions to sell will be taken by IBREL, while buy­ing de­ci­sions will be taken by the Black­stone board. At some point in time, the part­ners may con­sider to list the as­sets as a REIT ( real es­tate in­vest­ment trust) de­pend­ing on how the REIT model plays out in In­dia,” the per­son added.

When con­tacted, Black­stone de­clined to com­ment.

In re­cent months, In­di­a­b­ulls has been steadily build­ing its rental of­fice port­fo­lio in NCRand Mum­bai. IBREL, through a sub­sidiary, had en­tered into an agree­ment to ac­quire a new­ly­con­structed com­mer­cial build- ing with leasable area of about 250,000 sq. ft in Gu­ru­gram. The com­pany was also look­ing to ac­quire acom­mer­cial­build­ing at Udyog Vi­har, Gu­ru­gram, for ₹ 150 crore. In­di­a­b­ulls In­fraes­tate Ltd, a sub­sidiary of IBREL, had signed a term-sheet with Ori­con En­ter­prises Ltd to jointly de­velop a com­mer­cial build­ing on a land par­cel in Worli, Mum­bai. Once ex­e­cuted, In­di­a­b­ulls would get own­er­ship rights to about 255,000 sq. ft of leasable area. IBREL ex­pects to en­hance its an­nu­ity rev­enue to ₹ 1,547 crore by 2020-21 from the rental prop­er­ties port­fo­lio, in­clud­ing the rental port­fo­lio of its 50:50 JV with Black­stone. The Mum­baibased de­vel­oper has also taken strate­gic calls to stream­line its real es­tate port­fo­lio.

In May, IBREL had sold off its 1.9 mil­lion sq. ft of­fice park, One In­di­a­b­ulls Park, in Chen­nai to Black­stone in an out­right deal for ₹ 900 crore. It was part of its plan to exit the south­ern city, a non-core mar­ket for the com­pany’s busi­ness. It had also sold its res­i­den­tial town­ship project, In­di­a­b­ulls Greens, in Chen­nai to Ben­galuru-based Ozone Group for ₹ 285 crore.

“Black­stone’s strat­egy in In­dia has been to grow through part­ner­ships and it makes sense to have re­gional part­ners. The NCR of­fice mar­ket is clock­ing healthy ab­sorp­tion with 7.5-8 mil­lion sq. ft be­ing leased ev­ery year, and has space to ex­pand,” said Ra­jeev Bairathi, ex­ec­u­tive di­rec­tor and head of cap­i­tal mar­kets, at prop­erty ad­vi­sory Knight Frank In­dia.

“With REITs hav­ing the abil­ity to de­liver dou­ble- digit re­turns through a mix of div­i­dend yield and cap­i­tal ap­pre­ci­a­tion, In­dia’s cur­rent Grade A of­fice stock of 454 mil­lion sq. ft presents a large op­por­tu­nity,” said a re­cent ICICI Se­cu­ri­ties re­port.


Black­stone aims to grow in In­dia through part­ner­ships

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