Singapore-based Xander Investment Management has agreed to purchase a business park in the Indian city of Pune for INR 900 crore ($130 million), according to market sources.
The private equity firm, which has invested over $3.7 billion in India real estate, is buying the 1.1 million square foot (102,000 square metre) Weikfield IT Citi Info Park in Maharashtra state’s second-largest city from the Indian arm of US-based property investment firm New Vernon Capital.
“Through this acquisition, we add a quality Pune asset with substantial growth potential to our ongoing India office value-add strategy,” said Xander Investment Management principal Arpit Singh.
Xander Picks Up Fully-Leased Business Park
Xander paid just over INR 8,181 rupees ($118) per square foot for the 13-year-old office asset in an affluent northwestern suburb of Pune.
The Weikfield IT Citi Info Park is fully leased to tenants including Whirlpool, Maersk, IT management company Nihilent and travel bookings operator Tavisca Solutions.
Average rent in the three-block, 11-storey business complex is INR 70 rupees per square foot per month, according to market sources, giving a monthly rental income of INR 77 million with an initial capitalisation rate of 8 percent.
Known as the Oxford of the East on account of its educational institutions, and ranked at the top of the Indian government’s ease-of-living index, the city is 140 kilometres southeast of Mumbai.
“The asset nicely complements our existing, one hundred percent owned and operated portfolio across key Indian cities, and enables us to offer a strategic Pune location to tenants,” Singh said.
Directly opposite the Hyatt Regency on Nagar Road, the business park is three kilometres from Pune International Airport and six kilometres from Pune railway station.
Singh said that the acquisition contributes to Xander’s growing office footprint in India, with the company’s acquisition strategy based on acquiring stabilised assets and new developments, while leveraging the company’s extensive on-ground operating expertise, tenant relationships and scale.
Banking on India Leasing Momentum
The Singapore firm is making its acquisition after office absorption in India’s top seven cities – which include Pune – increased by 2 percent during the first six months of 2019, compared with the same period last year, according to Colliers International.
Just nine months ago, Xander signed a deal to invest $350 million in the development and acquisition of a four and a half million square foot business park in Hyderbad developed by Phoenix Group.
Last year the company purchased a 250,000 square foot office building in Embassy Golf Links Business Park in Bangalore from the Sanjay Ghodawat Group for INR 350 crore.
New Vernon Exits after Early Entry
New Jersey-headquartered New Vernon Capital has exited its investment in the business park following multi-phase investments dating from the project’s inception fourteen years ago.
The affiliate of Nathan Shapiro’s New Vernon Advisers and New Vernon Wealth Management has invested in eight and a half million square feet of Indian real estate over the last decade, however, in the last few years, the investment firm has focused on divestments after entering the market early in the cycle.
Just last year, New Vernon sold the 600,000 square foot G: Corp Tech Park in Thane, a city just outside of the Maharashtra capital of Mumbai.
That deal saw New Vernon Capital sell the 98-percent-leased business complex for INR 400 crore to Godrej Fund Management, with the fund manager paying INR 6,667 rupees per square foot of leasable space.
Two years before, New Vernon Capital sold its 49 percent stake in Chennai-based IT Park SP Infocity to the Canada Pension Plan Investment Board for over $220 million, exiting what had been a joint venture with Mumbai-based conglomerate Shapoorji Pallonji.