Canada’s Brookfield Asset Management has agreed to purchase a set of four hotels, a hospitality development project and branding rights to one of India’s elite hotel chains from Hotel Leela Venture for INR 39.5 billion ($576 million), according to a stock exchange filing today by the Indian company.
The transaction is the latest in a multi-year series of disposals for one of India’s prestige hotel groups, which had defaulted on INR 21.2 million in interest payments to a creditor in September after building an INR 36.6 billion debt mountain.
The acquisition allows Brookfield to add one hotel each in the Indian cities of Bengaluru, Chennai, Delhi and Udaipur, along with the development project in Agra, less than two months after it reached a $15 billion final close on its largest ever global real estate investment fund.
Grabbing Distressed Hotels
Hotel Leela Venture, which is the holding company for Indian hotel brand Leela Palaces and Resorts Ltd, said that it was selling the five assets, along with the rights to use the “Leela” brand for hospitality businesses. to Brookfield. The Indian firm, which has legal action pending against its Mumbai hotel, will retain that property, as well as real estate assets in Hyderabad and Bengaluru.
The four existing hospitality venues brought Hotel Leela Venture INR 5.91 billion in income during the 2017-2018 financial year, according to the statement.
Hotel Leela Venture was advised in the transaction, which it expects to complete in three to six motnths, by Indian investment bank JM Financial, a unit of which had taken over Hotel Leela’s loans after a 2014 restructuring effort had failed.
Betting on Indian Real Estate Across Sectors
Brookfield won its India hotel prize after Thailand’s Minor Group, which owns the Anantara chain in its home country as well as having purchased HNA’s interest in Spain’s NH Hotels last year for $723 million, had backed out of a race for the haute hotel assets in January this year.
The Canadian private equity firm already has around $3.5 billion of assets under management in India, including 25 million square feet (2.3 million square metres) of office space.
The firm entered India in 2014 with its INR 35 billion acquisition of four office projects and stakes in two more assets, from Unitech Corporate Parks. Then in 2016, Brookfield agreed to pay INR 67 billion to buy 4.5 million square feet of office space in the Mumbai area from Hiranandani Group.
Still Shopping for More Deals
Brookfield senior vice president Ankur Gupta said in interviews earlier this year that the company will also look for opportunities in rental housing and logistics real estate projects in the country.
An official notice today from conglomerate Reliance Industries revealed that Brookfield has also just acquired the Indian firm’s East-West pipeline, a major artery for natural gas transport, for $1.87 billion.