Godrej Fund Management to invest, develop office assets for $600 million

Bengaluru: Godrej Fund Management (GFM), the real estate private equity arm of the Godrej Group, plans to invest in and build commercial office assets through a $150 million office investment fund as well as a $450 million office development fund, marking the firm’s entry into India’s booming office real estate sector.

It has raised the first tranches of both the office development as well as office investment funds. Jointly, the funds can invest in or develop office assets worth over $1 billion in value, the company said on Monday.

With this development, the assets under management for GFM, which also manages two existing residential investment funds, has crossed the $1 billion mark within a year of it being spun off as a separate business.

Godrej Build To Core-I (GBTC-I), a $450 million office investment platform, will invest in developing Grade-A office buildings in leading locations across key office markets in India. APG Asset Management NV, which has invested in previous funds managed by GFM, will be the cornerstone investor for GBTC-I. This fund will follow a “club style” investment approach where 2-3 key investors will be part of the decision-making process.

Godrej Office Fund-I (GOF-I), a $150 million discretionary blind pool fund, will invest in buying out office and commercial properties across India.

The entire fund is expected to be deployed by end-2018 across 2-3 acquisitions, said Karan Bolaria, managing director and CEO, Godrej Investment Advisers Ltd, a fund management business that Godrej Properties Ltd had set up last year.

“We are pleased with our diversification into the office asset space through successful first closes of both our office funds. The blend of investment management capabilities and strategic access to best-in-class development capabilities provides GFM with a competitive advantage and positions it well to deliver targeted risk-adjusted returns,” Bolaria said.

“We believe there is a lot of opportunity for our fund management company in both residential and commercial real estate in India and we are happy to see the business quickly reach the $1 billion AUM (assets under management) milestone. We look forward to building a strong track record of excellence to ensure we remain a preferred partner to institutional capital looking to participate in the growth of the Indian real estate sector,” said Pirojsha Godrej, chairman, Godrej Investment Advisers.

Godrej Properties has also diluted 50% stake in the entity developing Godrej Two, an under-construction commercial building located at its flagship project, The Trees, in Mumbai’s Vikhroli, through a deal with GFM’s GBTC-I.

The mixed-use precinct spread across 9.4 acres houses Godrej One, the Godrej Group’s global headquarters, and will comprise a luxury Taj hotel, cultural buildings, luxury residences and a high-street retail park. Godrej Two will offer around 1.2 million sq. ft of built space and will be delivered within three years.