Bengaluru: Canada’s Brookfield Asset Management Inc. is set to invest Rs450 crore in Mumbai-based Peninsula Land Ltd’s premium project in Byculla in a structured debt transaction, three people familiar with the deal said. The Peninsula deal marks Brookfield’s first investment in a residential project in India from its new $9 billion global real estate fund.
The money will be used partly to refinance Kotak Mahindra Bank’s loan to Peninsula Land, which would give the bank an exit, and partly for general corporate purposes.
Peninsula Land, an Ashok Piramal Group firm, and Brookfield also have a Rs1,200-crore debt fund called the Peninsula Brookfield India Real Estate Fund.
“Brookfield is looking to do more sizeable transactions in the residential sector where it will invest directly from its global corpus,” said one of the three people mentioned above, who did not wish to be named.
Dev Santani, senior vice-president, investments at Brookfield, and Peninsula Land executives declined to comment on the transaction.
Brookfield Asset Management has about $240 billion in assets under management globally. In India, it has built a $2-billion asset base over the past six years or so, across real estate and infrastructure projects.
Brookfield is gearing up to significantly increase its real estate investments in India, in both office and residential spaces, Mint reported on 9 June. The asset manager will look at investments in the residential sector through equity as well as debt structures.
Peninsula is planning to launch the residential project in Byculla sometime later this year, said the second person mentioned above.
The realty firm won an auction in 2013 to buy the five-acre land parcel in Byculla from Mahindra Lifespace Developers Ltd and the Kanoria family, who were joint owners, for about Rs650 crore. The land housed the now defunct New Great Eastern Spinning and Weaving Co. mill.
Peninsula , which has projects in Mumbai, Pune, Nashik, Bengaluru and Goa, had net debt of around Rs1,739 crore as of 30 June 2016. The developer’s 2015-16 annual report said that its priority is to deleverage its balance sheet by monetising non-moving, long-gestation land assets.
“Peninsula Land Limited is exploring opportunities to moving towards asset-light model for new project acquisitions,” according to the annual report.
The Peninsula-Brookfield fund has almost completely been deployed, with the investment period getting over. Market conditions will determine if the partners go for a second series of the fund.
“What many global funds are doing is that they are getting in early into residential projects, taking sizeable stake and working closely with the developer. The concept is more like a co-development arrangement. Just like global investors have participated in large office transactions, we have also noticed a pattern of investors and developers entering into alliances to develop residential projects,” said Shashank Jain, partner, transaction services, PricewaterhouseCoopers India.
In the office-space sector, Brookfield is at an advanced stage of buying out for $1 billion the office and retail assets of Hiranandani Developers Pvt. Ltd in the Mumbai suburb of Powai.
Earlier, in 2014, Brookfield bought out Unitech Corporate Parks Plc., a portfolio of six assets including special economic zones and information technology parks in Gurgaon, for around £205.9 million.
Brookfield has also applied to the Reserve Bank of India for a non-banking finance company (NBFC) licence, a Mint report said on 13 September. The new NBFC will fund residential project lending in relatively large ticket deals of Rs200-400 crore.