Blackstone to buy stake in Indiabulls’ office projects
The investor-developer duo had formed a commercial properties JV earlier this year.
Bengaluru: Private equity firm Blackstone Group LP is close to buying around 50% stake in two commercial office projects of Indiabulls Real Estate Ltd (IBREL) in Gurugram, said three people familiar with the development, requesting anonymity.
Blackstone’s stake acquisition comes after the investor-developer duo decided to form a commercial properties joint venture (JV) with rent-yielding assets earlier this year.
Both the office buildings are located in Gurugram’s Sector 18, Udyog Vihar. While Indiabulls Tech Park is completed and leased out, the other is under construction. The enterprise value of the two buildings will be ₹600-650 crore, said the first person mentioned above.
“The deal is at an advanced stage. It’s expected to close this quarter,” said a second person.
In November, Indiabulls had said that it was selling a stake in two Gurugram office projects, but had not disclosed the investor’s name or deal value.
Blackstone and Indiabulls spokespersons declined to comment on the development.
A slew of deals were signed between Blackstone and Indiabulls in 2018. In March, Blackstone had bought a 50% stake in Indiabulls’ flagship office properties in central Mumbai—One Indiabulls Centre and Indiabulls Finance Centre—for $730 million. The JV portfolio also includes the under-construction office tower of Indiabulls Finance Centre and a residential development, Sky Forest. The investment firm has also acquired a Chennai-based commercial asset, One Indiabulls Park, for ₹850-900 crore.
In 2017, Indiabulls Real Estate’s board had decided to create a new entity, Indiabulls Commercial Assets Ltd (IBCAL), which will hold existing commercial assets, as well as future projects.
However, after the partnership with Blackstone, the realty firm decided not to pursue its initial plan. Under the new JV, decisions on selling a property will be taken by Indiabulls Real Estate, 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 real estate investment trust (REIT), depending on how the model plays out in India. Blackstone Real Estate has committed to over $5.3 billion across 31 investments in India. Out of this, $3.9 billion is in office assets covering 100 million sq. ft.
Indiabulls had earlier said that it plans to use a bulk of the capital from the transactions (The investment firm also acquired a Chennai-based asset...) to pare debt and for growth opportunities. As of 30 September, its net debt stood at ₹4,803 crore.
In the National Capital Region (NCR), India’s largest property market, the residential sector may be under-performing due to slow sales, high levels of unsold inventory and lack of trust in housing developers, but comparatively, the commercial office sector has fared better.
“In NCR, there are two types of investors in the office sector today—institutional investors who are buying partial or full stake in good quality office buildings, though supply of these are limited. There are also high-net worth individuals who are buying office space. Not many domestic office funds have taken off yet,” said Rajeev Bairathi, executive director and head of capital markets, at property advisory Knight Frank India.
Separately, in September, Blackstone-backed Embassy Office Parks filed with Sebi an offer document to raise over ₹5,000 crore through an REIT. The REIT is likely to be listed early next year. The portfolio, which includes Blackstone’s own assets as well as those in partnership with developer Embassy Group, comprises 33 million sq ft across cities.
In the January-June period, NCR accounted for 28% of the total absorption pie in India at 3.5 million sq ft, second only to Bengaluru (4.3 million sq ft), as per a report by Colliers International.
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