Ascendas India Trust is making its maiden tech park investment in the rising corporate hub of Navi Mumbai, by agreeing to buy up two buildings under development in a deal worth up to S$186 million ($139 million).
The Singapore-listed property trust will provide funding for the construction of the projects within Aurum Platz IT Park in the Mumbai satellite city, which it will acquire upon their completion. The first building of 600,000 square feet and the second building of 800,000 square feet are slated for completion in the second half of 2018 and early 2020, respectively, according to a statement by the trust’s manager.
The pair of projects forms part of the four-building Aurum IT SEZ within the mixed-use, five million square foot business park development. Ascendas India Trust forged the deal with Aurum Platz Private Limited, a subsidiary of Mumbai-based investment firm Aurum Ventures Private Limited.
Deal Boosts India Trust’s Portfolio by 11%
Managed by a unit of Singapore-based business space builder Ascendas-Singbridge Group, the trust owns properties across Bangalore, Hyderabad, Chennai, and Pune in addition to India’s largest city Mumbai. The newly-announced transaction, which will boost Ascendas India Trust’s portfolio of operating space in the country by 11 percent to 14.2 million square feet, also gives the trust the right of first refusal on Buildings 3 and 4 of Aurum IT SEZ.
“The proposed acquisition of the two buildings in AURUM IT SEZ marks our foray into the IT Park business in Navi Mumbai, which is an important market for large multi-national corporations,” commented Sanjeev Dasgupta, CEO of the trustee-manager in the statement. “The properties are strategically located on Thane-Belapur Expressway, a key IT corridor in Mumbai.”
Dasgupta added that the property lies nearby the Mumbai suburban railway as well as campuses of other large Indian firms. The Aurum IT SEZ occupies more than 16 acres of the 30-acre Aurum Platz IT Park, which is leased from the Maharashtra Industrial Development Corporation. Around 200,000 square feet of Building 1 is pre-leased to a major information technology company.
Ascendas India Trust Ventures into Captive Tech Hub
Through the two-stage transaction, Ascendas India Trust will subscribe to S$100.2 million in debentures issued by the co-developer of the two buildings to fund the construction. The trust will complete the acquisition by buying a 100 percent stake in the co-developer (owned by Aurum Platz Pvt Ltd) 24 months after completion, or when certain leasing milestones have been achieved.
The purchase price, which will be calculated based on key factors such as rent, occupancy and capitalisation rates, is expected to be no more than S$186 million, according to the statement.
In a presentation, Ascendas India Trust said the deal would give the trust “an operating presence in Mumbai, which is India’s financial capital and one of the country’s fastest growing cities… In particular, Navi Mumbai is fast becoming a key destination for captive technology businesses.”
With a population of around 1.1 million, Navi Mumbai has benefitted from government investment and infrastructure creation to become an important centre for education and corporate back-office operations, luring young professionals from the Mumbai area.