Brookfield Notches India’s Biggest Office Deal With $1.5B Ecoworld Sale to REIT

When Brookfield agreed last week to sell a business park in Bengaluru for INR 131.3 billion ($1.5 billion), the Canadian asset management giant set in motion India’s biggest-ever office real estate transaction.

The divestment of Ecoworld, a 7.7 million square foot (715,353 square metre) campus along the Karnataka capital’s Outer Ring Road, into the group’s sponsored Brookfield India Real Estate Trust also set a mark as the top transaction by value and square footage for a 100 percent acquisition by a listed REIT in India, according to JLL, which advised Brookfield on the deal.

JLL’s sale exercise attracted three expressions of interest from five potential investors that were approached, the consultancy said. Upon completion, the deal will expand BIRET’s portfolio by over 30 percent and give the trust entry into Bengaluru’s market for global capability centres, the offshore units set up by multinationals to provide support services.

“The opportunity garnered strong interest from global sovereign funds, domestic investors and listed REITs, demonstrating robust investor confidence in India’s commercial real estate sector and Bengaluru’s position as the nation’s leading GCC hub,” JLL said.

RMZ Development

Brookfield in late 2020 purchased Ecoworld as part of a $2 billion acquisition of 12.8 million square feet of assets from Bengaluru-based builder RMZ Corp, in India’s largest-ever real estate deal at the time.

The business park’s GCC tenants include finance groups Morgan Stanley and Standard Chartered, industrial conglomerate Honeywell and energy giant Shell. 

BIRET’s buy of Ecoworld translates to INR 17,045 ($195) per square foot of gross leasable area and a net operating income yield of 7.7 percent. The enterprise valuation of INR 131.3 million includes the full value of the property management contract of the asset management firm providing operation services to Ecoworld.

The property has a committed occupancy of 94 percent and a weighted average lease expiry of six years, excluding a 700,000 square foot section due to undergo refurbishment after relocation of the existing tenant to another tower within the business park, according to a presentation.

“The site may also be suitable for a profitable redevelopment at attractive yields,” said the manager of BIRET, whose current portfolio spans 29.1 million square feet across 10 commercial assets.

Pulsating Market

Brookfield’s Bengaluru deal comes less than two months after Singapore’s Keppel Ltd sold an office complex in Chennai to a fund managed by Nuvama Asset Management and Cushman & Wakefield for INR 25.5 billion ($287.4 million).

Temasek-backed Keppel unloaded the One Paramount business park after buying the 9 acre campus a little over a year earlier from RMZ and Canadian pension giant CPPIB for INR 22 billion.

Also in September, Keppel’s Temasek stablemate CapitaLand Investment announced the first-ever divestment by its flagship India REIT. CapitaLand India Trust is selling two IT parks, CyberVale in Chennai and CyberPearl in Hyderabad, to an unrelated third party for a total of INR 11 billion ($124.4 million), marking CLINT’s inaugural disposal since listing in 2007.

Another Singaporean state giant, GIC, has set up a partnership with Brookfield to own and manage three India office properties with a total value of $1 billion, market sources confirmed to Mingtiandi. The seed assets of the partnership are Brookfield’s Equinox office park in Mumbai and two GIC-owned properties at Bhartiya City in Bengaluru and Phoenix Aquila in Hyderabad, the sources said.