BackBlackstone invests `450 cr in Pune SEZ
Investment made in return for 50% stake in the 4.5 million sq. ft project developed by Panchshil Realty
Premium(Indranil Bhoumik/Mint)
Mumbai: US-based private equity firm Blackstone Group LP has invested ₹ 450 crore in Eon Free Zone, a special economic zone (SEZ) developed by Pune-based real estate company Panchshil Realty, in return for a 50% stake in the project, according to two persons familiar with the development.
Eon Free Zone, India’s first notified information technology (IT) SEZ, spans 4.5 million sq. ft and was jointly developed by Panchshil and Ireo Management Pvt. Ltd, a private equity (PE) fund.
“In 2012, Panchshil Realty acquired the 50% stake held by Ireo Management in Eon for ₹ 30 crore. This stake has now been sold to Blackstone," said one of the two persons cited above, both of whom didn’t want to be identified. The rental value of the project is ₹ 40 per sq. ft, per month, the person said.
Panchshil, according to the developer’s website, has investors such as Morgan Stanley and Xander Group Inc. and has developed over 12 million square feet of real estate. It is in the process of developing over 21 million sq. ft of corporate parks, SEZs, hotels and villas, the website states.
“Blackstone is strengthening its core assets and it is a good deal for them. Eon Free Zone is a high spec (premium) building," said Shobhit Agarwal, managing director, capital markets, at property consultant Jones Lang LaSalle India.
Responding to an email sent by Mint, Akhil K. Gupta, senior managing director and chairman of Blackstone India, said, “It is our policy not to comment on specific deal situations, whether we work on it or not." Panchshil Realty executives were unavailable for comment. An email sent on Tuesday to the company elicited no response.
PE investments in both residential and commercial properties rose in 2012 even as property sales slowed last year, according to reports released in March by real estate consultants Knight Frank and Jones Lang LaSalle.
The total value of PE investments in real estate rose 7% to ₹ 6,200 crore in 2012, according to a report published on 13 March by property consultant Cushman and Wakefield.
“In terms of value, a majority of the investments were noted in ready income generating/operational office assets (commercial properties that are easy to lease) at ₹ 3,230 crore and saw an increase of 34% over 2011," the report said.
During the launch of its commercial project Godrej BKC on 5 March, Pirojsha Godrej, managing director and chief executive of Godrej Properties Ltd, told reporters, “Commercial property rates are subdued at the moment but we expect the price to pick up by 2015."
“Rentals from commercial properties are low at the moment, but it is going to turn around soon and the early movers will benefit from it." said Sanjay Dutt, executive managing director (South Asia), Cushman and Wakefield.
Blackstone has been the leading investor in commercial real estate despite the sector’s slow growth.
On 28 February, Reuters reported that Blackstone was investing in an SEZ in Gurgaon, owned by Unitech Corporate Parks and developed by Unitech Ltd for about ₹ 2,400 crore.
Mint reported on 7 February that Blackstone, Bangalore-based Embassy Property Developments Pvt. Ltd and HDFC Property Fund—a private equity unit of Housing Development Finance Corporation Ltd—are set to buy out Vrindavan Tech Village, a special economic zone in Bangalore, for ₹ 1,951 crore.
According to Dutt, PE companies such as Blackstone, Xander and Ascendas Pte. Ltd will continue to invest in commercial real estate as they offer assured income in the face of low supply.
“We are open to commercial projects if the valuation is acceptable," said V. Hari Krishna, director at Kotak Realty Fund, a division of Kotak Investment Advisors Ltd.
Not all PE firms are enthused by commercial real estate. ASK Property Investment Advisors Pvt. Ltd, which is in the process of raising its first offshore fund of around $250 million in Singapore, has plans only to invest in residential properties, according to Amit Bhagat, chief executive and managing director.
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