Global PEs, sovereign, pension funds in race for Unitech SEZ
Aug 05, 2013
Source : The Economic Times

 

DELHI: Real estate investment company UnitechBSE -1.97 % Corporate Parks has shortlisted two global private equity funds, a sovereign wealth fund of Singapore and a Canadian pension fund to make second round of bids for its 3.6 million sq ft IT special economic zone in Gurgaon near Delhi.

A person close to the development said the company has invited London-based Xander, New York-headquartered Blackstone, Singapore's GIC and the Canadian Pension Fund for the second round of bidding.

Bidders in the first round, which included funds like Mapletree and Tishman Speyer, had put in offers between Rs 2,300 crore and Rs 2,700 crore for the SEZ. Listed on London's Alternative Investment Market, the SEZ is 45% owned by real estate developer Unitech.

The transaction for the sale of the SEZ, which has tenants like Accenture, RBS, Bank of America, Sapient and Ernst & Young, is likely to be finalised by the end of August, said the person quoted earlier.

Unitech is expected to get around Rs 1,100 crore from the transaction, considering there is no debt on the property. The company will use the proceeds to reduce its debt that stood at Rs 5,642 crore on March 31. Spokesmen for Unitech and Xander declined to comment. GIC and Blackstone did not respond to email queries sent by ET. The board of Unitech Corporate Parks, chaired by Donald Lake and includes Unitech Managing Director Ajay Chandra, had visited India last month and appointed international property consultancy Jones Lang La Salle to run the bid process. In the past, the board had shown reservations over selling the assets under Unitech Corporate Parks till the properties were "fully mature". "They wanted to sell after the assets are almost fully leased," said the person. Now, considering that the asset in Gurgaon is 75% complete, the board has agreed to sell the SEZ.

Unitech Corporate Parks had raised around £360 million by issuing its shares on the AIM in December 2006 and has six assets under development in Noida, Greater Noida, Gurgaon and Kolkata.Global PEs, sovereign, pension funds in race for Unitech SEZ

The Unitech Infospace in Gurgaon, which is being sold, has 2.6 million sq ft of constructed space that is leased. With the average rental here being 64 per sq ft per month, Unitech Corporate Parks gets revenues of close to Rs 200 crore from rental and maintenance. When the rest of the 1 million sq ft is completed, revenues will rise to around Rs 280 crore.

While the deal is expected to be finalised by August-end, a final closure will only happen by the end of the year as it will require clearance from the Board of Approval for Special Economic Zones under the ministry of commerce.

In the last two years, a number of PE funds including Blackstone and Indiareit have become active in buying completed SEZs, IT parks and commercial office buildings that are leased out. While such income producing assets are seen as safe investments that carry minimum risk, funds are also interested as commercial property values are currently low.

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