MUMBAI: Private equity firm Milestone Capital Advisors has sold a 2.5 lakh sq ft commercial property in Pune for about Rs 145 crore to a high-net-worth individual (HNI), marking a potential renewal of interest among such investors in assets that offer stable rental returns in addition to capital appreciation.
The office building, CentrumBSE 4.94 % B2 in Kalyani Nagar, was one of Milestone's initial investments through its rental yield fund IL&FS Milestone Fund I in 2008. It currently houses tenants including Reliance CommunicationsBSE -0.08 %, Standard Chartered and Vodafone.
"Including quarterly rental yields and capital appreciation, our investment in the property has provided 1.83 times returns. We have managed to get a healthy exit especially in a recessionary market like now," said Rubi Arya, director and vice chairman of Milestone Capital Advisors.
The company did not disclose the name of the buyer. The deal comes amid sluggishness in commercial property market that is making it hard for several early investors of office properties to find an exit with good returns.
IL&FS Milestone Fund I, one of India's first REIT (real estate investment trust)-like structures, had earlier exited from another commercial property, Raheja Titanium at Jogeshwari in Mumbai. Most private equity players that had rushed to invest in Indian property market following the opening up of foreign direct investment (FDI) in the sector are stuck with their investments.
Given the lacklustre primary market, falling valuations, weak sales and realisations, the exit route has dried up for many investors and most of the exits are taking place through promoter-driven buybacks.
Milestone manages three rentalyield funds including IL&FS Milestone Fund I, II and IL&FS Milestone Core plus Retail Fund LLC. Besides, the firm manages seven real estate funds, including a REIT-like structure, bullion products and portfolio management systems.
Out of its total portfolio spread over 25 million sq ft, Milestone's rental yield funds have invested in 4 million sq ft of prime commercial properties, including offices, IT & ITeS parks and logistic & warehousing, and valued at over Rs 1,400 crore.
These funds, after distributing rental yield income for 24 quarters since inception, are also looking at exits opportunities.