CapitaLand, Xander vie for Blackstone’s IT Parks

Mumbai: Singapore-based leading real estate company CapitaLand Ltd and global investment firm The Xander Group Inc. are the front runners to acquire Pune-based IT Parks, which is owned by US fund The Blackstone Group, said two people aware of the development.

Blackstone has put its BlueRidge special economic zone (SEZ) and another IT SEZ in Hinjewadi area of Pune on sale, and hired Morgan Stanley to find a buyer.

The deal will be in the range of Rs2,000 crore, said the first person. Others who have joined in the race include Shapoorji Pallonji-Allianz and Singapore-based investor-developer Ascendas-Singbridge.

The 1.5-million-sq. ft BlueRidge special economic zone (SEZ) was acquired from private equity fund manager IDFC Alternatives in 2014, while the other SEZ—jointly developed by DLF and Hubtown (erstwhile Ackruti City)—was acquired by Blackstone for Rs810 crore in 2011.

CapitaLand, one of Asia’s largest real estate companies, owns and managed a global portfolio worth more than S$88 billion ($67 billion) as of 31 December 2017, comprising integrated developments, shopping malls, serviced residences, offices, homes, real estate investment trusts (REITs) and funds, according to the company website.

In India, CapitaLand operates seven serviced residence properties in Bengaluru, Gurugram, Chennai and Ahmedabad while it owns two malls in Jalandhar and Nagpur.

In January, CapitaLand had sold its stake in six malls across India to Bengaluru based developer Prestige Group for Rs324 crore. Prestige Group had acquired CapitaLand’s stake in special purpose vehicles (SPVs) it had formed between two parties. The malls are situated at Bengaluru, Mysore, Mangalore, Hyderabad, Kochi and Udaipur.

Similarly, global investment firm Xander Group Inc., which has invested around $2 billion in India’s real estate sector, has made multiple buyouts recently as part of expanding its commercial office portfolio in the country.

It had bought an office building of around 250,000 sq. ft at Embassy Golf Links Business Park in Bengaluru for Rs350 crore last month.

In 2017, Xander group and Dutch pension fund asset manager APG Asset Management NV bought an information technology SEZ in south Chennai for around $350 million (Rs2,250 crore) from Shriram Properties.

B. V. Bharadwaja, Group country head, India, CapitaLand International said, “We are constantly on the lookout for opportunities to expand our presence in India and will not comment on speculation in the market.”

Spokespersons at Blackstone, Morgan Stanley declined to comment while mails sent to Xander went unanswered.

Though investors are keeping away from residential real estate, offices remains a hot real estate investment destination in India.

In 2016, Canada-based Brookfield Asset Management Inc. had acquired 5 million sq ft of commercial property from the Hiranandani group for $1 billion (Rs6,500 crore), in one of the largest buyouts in commercial realty space.

With the demand for office space increasing, the average office space to be absorbed in top Indian cities is expected to be at 40-45 million sq. ft per year until 2020, according to a Cushman & Wakefield 2017 report.

“Commercial office real estate is expected to see greater participation of foreign institutional investors as they continue to pick up leased and under-construction assets in India,” said the report - Commercial Office Real Estate: Positive Disruptions- Beacons of Change.

The investment scenario is now marked by a combination of sovereign/pension funds with a long-term investment focus, along with private equity funds that have a typical 7-8 years investment horizon. This is leading to a marked shift in ownership pattern with institutional investors now being amongst some of the largest owners of office assets, it added.

Active investors in India’s commercial office space include the Government of Singapore Investment Corp. Pte Ltd (GIC), Canadian fund Brookfield Asset Management Inc., Ascendas Property Fund Trustee Pte Ltd, RMZ Corp. (backed by Qatar Investment Authority), Blackstone Group Lp and Xander Group.