The world’s biggest landlord is adding to its assets in its most profitable market as Blackstone was revealed this week as having agreed to purchase a Chennai office complex for Indian rupees 8.5 billion ($123.6 million).
Under the terms of an agreement with Indiabulls Real Estate announced by the south Asian developer on July 6th, Blackstone is buying a 100 percent stake in One Indiabulls Park, a 1.9 million square foot (177,000 square metre) business park complex in the capital of southeastern India’s Tamil Nadu state.
The transaction is Blackstone’s second major deal with Indiabulls this year after Stephen Schwarzman’s alternative investment giant purchased a 50 percent stake in a pair of Mumbai office buildings from the Gurgaon-based developer in March for around $730 million.
Blackstone Takes Over Fully-Occupied Business Park
In an announcement to the Bombay and Indian stock exchanges, Indiabulls said that a committee of its board had authorised a sale and purchase agreement with Blackstone “by which Company will divest its 100 percent stake in the business of commercial assets at Ambattur, Chennai, being a non-core real estate business operations for the Company, and will realise a gross value of approx. Rs 850 Cr, subject to adjustments, if any, basis certain assets and liabilities on closing (“Transaction”).
With this latest transaction Blackstone will take possession of a business park that is already home to multinational tenants including Royal Bank of Scotland and Vodafone while also providing corporate homes to India’s Yes Bank and telecom giant Bharat Sanchar Nigam.
Indiabulls had leaked word of the property’s imminent sale in March with reports at the time indicating a sale price of 12 billion rupees. One Indiabulls Park is said to be 90 percent occupied and earns annual rent of 750 million rupees.
Indiabulls had purchased the three tower 16-storey complex in the Ambattur industrial estate in Chennai from India Land and Properties in 2014 for 6 billion rupees when it was still known as India Land Tech Park.
Indiabulls Goes Asset Light
The sale of the business park complex is to be completed in tranches with final closing projected for September 30, 2019 according to Indiabulls’ announcement. The company indicated that the sale was part of its conversion to an “asset light” business strategy.
“IBREL (Indiabulls Real Estate Ltd) will maintain an asset light model, and do regular sales from its portfolio of owned and completed office properties to the rental platform with/of investors this will ensure predictable earnings, high cash flows and high return on equity (ROE) for the business of IBREL,” said recently in a presentation distributed to analysts.
Blackstone Keeps Adding to India Portfolio
The company headed by chairman Sameer Gehlaut disclosed in March that it had agreed to “indirectly divest” 50 percent stakes in entities controlling a pair of assets to Blackstone for approximately $1.46 billion.
Reuters, citing sources familiar with the transaction, indicated that the assets concerned were the prime office towers Indiabulls Finance Centre and One Indiabulls Centre in central Mumbai.
That March transaction put Blackstone’s capital commitments to Indian real estate at around $5.1 billion, of which $3.7 billion was in office space. A report in Bloomberg earlier this year cited sources at Blackstone as saying that the investment giant had averaged annual internal rates of return of around 30 percent on its India private equity investments since 2011, leading all markets where the firm invests worldwide.