Subsequent to establishing a commercial properties platform with Indiabulls Real Estate, US-based private equity major Blackstone Group has acquired the realty developer’s Chennai commercial asset One Indiabulls Park for close to Rs 900 cr on an outright basis.
This is the second transaction the developer has concluded following the sale of 50% stake in its two office properties One Indiabulls and Indiabulls Finance Center in central Mumbai to Blackstone Group for $730 million or Rs 4,750 cr.
Indiabulls Real Estate intends to utilize the funds raised through this monetization in reducing its debt burden. With this repayment, the company net debt would stand at Rs 2,000 cr from Rs 10,000 cr an year ago.
These transactions are in line with its stated strategy of maintaining an asset light model, and conclude regular sales from its portfolio of owned and completed office properties to the rental platform.
One Indiabulls Park, Chennai, is a 1.9 mln sqft commercial office asset and houses tenants such as Royal Bank of Scotland, Yes Bank, Vodafone, BSNL and Brittania Industries. The property is 90% leased and generates annual rent of Rs 75 cr, which is expected to rise to Rs 95 cr by 2019-20 owing to rental escalation clauses.
The company has also sold its Chennai residential development project for around Rs 300 cr as part of its asset monetisation plan. The residential development Indiabulls Greens, Chennai, has 2.07 mln sqft of saleable area and according to the company’s most recent earnings release, around 63% of the project is sold and handover of flats has begun.
Indiabulls Real Estate, through its wholly-owned subsidiary Yashita Buildcon, has recently entered into a binding and definitive agreement to acquire a newly constructed commercial building with leasable area of around 2.5 lakh sqft in Gurugram. With this acquisition, total annualized annuity revenue would be Rs 1,513 cr in 2020-21. The company has already stated that the business strategy will now be focused on annuity revenue from commercial assets in Mumbai and the National Capital Region, and future investments will be directed towards building the commercial assets’ portfolio in these cities. The company also has a residential development in London. The strategy for the residential development part of the business in India will focus on an asset-light model of entering into joint development agreements.