In the year’s largest commercial real estate deal so far, US-based private equity firm Blackstone Group Lp has acquired a marquee office building in Mumbai’s Bandra Kurla Complex (BKC) for ₹2,500 crore, said two people aware of the development, requesting anonymity.
Owned and developed by Mumbai-based real estate firm Radius Developers, the eight-storey building, One BKC, is spread across 700,000 sq.ft and is fully leased out.
Some of the big tenants include Bank of America, Facebook, Merril Lynch, Cisco and Amazon. Spokespersons of both Blackstone and Radius declined to comment on the development.
“It’s a much sought after grade A building in Mumbai. There is no building like this in BKC, which is 100% let out, especially to large multinational companies," said the first person mentioned above. A spokesperson of property advisory firm ANAROCK Property Consultants, which acted as adviser to the deal, also declined to comment.
Blackstone is also working on buying out Adani Realty’s 800,000 sq.ft commercial project, Inspire, for around ₹1,900 crore in the same area.
The Blackstone-One BKC deal will lead to Indiabulls Housing Finance exiting the project.
Radius had taken a loan of around ₹1,600 crore from Indiabulls to develop the office building.
Blackstone has been on an aggressive buying spree in India to build a large portfolio of marque commercial real estate.
So far, it has invested $5.4 billion across 33 investments in India’s real estate sector. Of this $4 billion has been invested in office assets alone.
In March, Blackstone-backed Embassy group launched India’s first real estate investment trust (REIT) worth around ₹4,750 crore.
The Embassy Office Parks REIT portfolio comprised around 33 million sq.ft of office space spread across seven office parks and four prime city-centre office buildings across India, including in Bengaluru and Mumbai.
In 2018, Blackstone had signed a slew of deals with Indiabulls Real Estate Ltd. Some of the big deals in the last one year include the buying out of a 50% stake in Indiabulls’ flagship office properties in central Mumbai—One Indiabulls Centre and Indiabulls Finance Centre—for $730 million. It also acquired the Mumbai-based firm’s Chennai commercial asset for ₹ 900 crore.
Other global private equity investment firms, including Canada’s Brookfield Asset Management, and sovereign wealth funds like Singapore’s GIC Pvt. Ltd and Canada Pension Plan Investment Board (CPPIB), have also been in the race to buy out Grade A office building.
All of them plan to capitalize on the growing demand for commercial office spaces in India.
As per a report by real estate advisory firm Knight Frank, office rents in Bengaluru and Mumbai saw an increase of 17% and 5% year-on-year, respectively, in the first half of this calendar year.
This follows a strong performance in 2018, due to an undersupply in both markets, and strong demand from technology firms. Delhi also saw 1.4% rise in rents in the prime office market.