BANGALORE: Private equity giant Blackstone's big appetite for India's commercial real estate is poised to trigger more buyouts. The global investor is close to acquiring a 1-million sqft office space at Vikhroli in Mumbai for Rs 1,050 crore from homegrown real estate fund house Milestone Capital.
The fully leased-out property, 247 Park, is 74% owned by Milestone and 26% by HCC Real Estate. The asset carries a net enterprise valuation of Rs 1,000 crore and a working capital requirement of around Rs 50 crore, people directly involved with the matter said. This comes a week after blackstone closed a transaction acquiring the iconic Express Towers in South Mumbai for Rs 900 crore, first reported by TOI in March last year. The property was acquired through a joint venture with Pune-based Panchshil Realty, in which the latter owns majority shares, sources added.
Sources added that the deal with Milestone could also involve Panchshil jointly picking up the asset. Last year, Blackstone had submitted a term-sheet (a preliminary non-binding agreement) to buy out 247 Park, but walked away from the transaction in the absence of environment and regulatory clearances. "The deal is close to being sealed as all approvals are now in place," said one of the sources cited earlier. Both Milestone and Blackstone declined to offer comment. Milestone is one of the largest Indian real estate focused funds with Rs 3,200 crore in assets under management.
In 2010, Milestone picked up a majority stake in 247 Park, through a leveraged buyout, at an enterprise valuation of Rs 775 crore. Since then the property, which counts Siemens, DHL, Piramal and Future Group among clients, has clocked a capital value appreciation of close to 10% year-on-year. The annual rental revenue is estimated at Rs 100 crore, while average rental appreciation for the project has been 12%.
In the last two years, Blackstone has infused over $700 million into India's commercial real estate to emerge as the second largest office space landlord after Gurgaon-based DLF. Blackstone's portfolio of rent yielding office space stands at over 24 million sqft currently, behind DLF's 27 million sqft. Blackstone has a bigger joint venture with south India's largest commercial space developer Embassy Group. This JV controls 20 million sqft of developed and leased commercial space, which earns approximately Rs 700 crore in rental income annually.
Birla Sun Life MF buys ING MF assets
MUMBAI: Birla Sun Life Mutual Fund on Thursday said it has bought over the assets of ING Mutual Fund, about Rs 1,100 crore, for an undisclosed amount. Sources said that Birla MF, part of Aditya Birla Financial Services Group (ABFSG), paid less than Rs 10 crore for ING MF's assets although the top Birla group official did not confirm the price. ING MF was on the block for several years now and had initial negotiations with several fund houses.