APG Boosts Godrej Indian Office Platform to $250M First Closing

Godrej Fund Management (GFM), the real estate private equity arm of Mumbai-based Godrej Group, on Monday announced the $250 million first closing of its $500 million office development platform, GBTC II, with cornerstone investor APG Asset Management kicking in $200 million.

GFM aims to develop office assets in India worth more than $1.5 billion upon their completion as part of the rush into the country’s office market, which has also attracted foreign investors like Allianz and Blackstone.

Godrej Build to Core II is a “club style” office investment strategy focused on developing world-class office buildings in prime locations across leading office markets in India, GFM and Netherlands-based APG said in a release.

“We are pleased to partner with APG on our second build-to-core platform,” said Karan Bolaria, GFM’s managing director and chief executive. “Our group has strong conviction in India’s premium office sector and we believe the current dislocation in markets provides attractive capital deployment opportunities. The addition of this platform brings significant scale to our overall strategy, which will open up strategic avenues for value maximisation in the future.”

Productive Partnership

Local Indian media reported that Godrej Group invested the remaining $50 million in capital for GBTC II, which is the third India-focused office venture and fifth overall sponsored by its fund management unit.

APG previously made commitments to GBTC I and Godrej Office Fund I. For GBTC I, the Dutch asset manager in mid-2019 paid $150 million to take a one-third stake, with the property investment arm of Germany’s Allianz buying a matching stake.

GBTC I is a $450 million fund set up to develop premium offices in first-tier cities in India. GFM announced the final closing in August 2019, saying it was now in a position to invest or develop properties with a value over $1 billion.

The platform was seeded with two of Godrej’s existing office projects — one in Mumbai and another in Gurugram — with a combined gross floor area of 2 million square feet, as well as a pipeline of 1.3 million square feet in Bengaluru.

“We are looking forward to another successful partnership with Godrej,” said Graeme Torre, managing director of APG Asset Management Asia. “The build-to-core strategy for Indian offices aligns very well with our broader investment aspirations for our pension fund clients and our desire to invest alongside partners who offer best-in-class execution capabilities.”

Indian Offices Win International Attention

Foreign investors in recent years have flocked to Indian office assets, seeking gains from rising rents and a growing commercial sector.

In late 2019, a fund backed by Allianz Real Estate and Indian developer Shapoorji Pallonji Group notched India’s biggest commercial real estate deal of the year, agreeing to purchase the WaveRock office development in Hyderabad for $250 million.

In late 2020, India’s Competition Comm­ission gave the nod to US equity major Blackstone to buy a portfolio of commercial and retail properties from Bengaluru-based Prestige Estates. Valued at $1.5 billion, the mega-deal includes five completed office assets and four under-construction offices, in addition to nine retail malls and two hotels.

Blackstone’s $690 million IPO of its Embassy Office Park REIT in 2019 has been followed by additional listed trust moves by the US firm and its competitor, Brookfield Asset Management, as India’s growing tech sector supports returns for office property investments.