GIC Buying Back India Business Park From Pimco Prime Partnership for $259M

GIC is returning to familiar territory with an agreement to acquire a southern India business park from a fund managed by Europe’s Pimco Prime Real Estate after being part of a partnership which sold the Hyderabad asset to that venture four years ago.

Sources familiar with the transaction have confirmed to Mingtiandi that Singapore’s sovereign fund has signed an agreement to buy Waverock, a 2.4 million square foot (223,000 square metre) office property in the capital of Telangana state, with local media accounts putting the transaction price at INR 21.5 billion ($258.7 million).

SPREF II, an investment vehicle jointly operated by local real estate giant Shapoorji Pallonji Group together with Allianz Real Estate, as Pimco Prime was then known, in December 2019 had purchased the LEED Gold-certified complex from a GIC joint venture with US developer Tishman Speyer for INR 17.5 billion.

The deal is GIC’s latest bet on India real estate in recent months, with the sovereign fund in May having put a chunk of its estimated $799 billion in assets under management into a $1.4 billion India office JV with Brookfield, after setting up a $600 million India logistics venture with ESR in November of last year.

Betting on Tech Hub

In an office market propelled by global tech players, Waverock counts Apple among its tenants, with other local and international giants leasing space in the building including Accenture, Singaporean bank DBS, Tata Consultancy Services and the Gap.

At the stated compensation, GIC is buying the project for the equivalent of INR 8,958 per square foot, or about a 19 percent increase over what the Allianz venture paid to acquire the asset four years ago. With the rupee having slid in value against the US currency, in dollar terms the transaction price has climbed by around 4 percent.

Allianz and Shapoorji Pallonji Group set up the SREFII vehicle in 2017, with Canada’s CPPIB as a limited partner. Both Pimco Prime and GIC declined to comment on the transaction in response to queries from Mingtiandi.

GIC is buying back its business park after the net amount of office space leased in India rose to a three-quarter high in the April through June period, according to JLL, with growth in the country’s tech sector helping to make it one of the brightest spots for workspace in Asia Pacific.

Among India’s top seven markets, Hyderabad, together with Chennai and Mumbai, saw the highest net rates of absorption, the property agency said.

GIC’s repurchase of Waverock has emerged just two weeks after Singapore’s Capitaland opened the 1.4 million square foot first phase of its own business park project in Hyderabad. The Temasek Holdings-backed titan expects to build a total of 2.6 million square feet at International Tech Park Hyderabad, along with a 40MW data centre.

With Hyderabad home to an estimated 1,500 tech firms employing more than 9 million workers, according to government figures, the first phase of CapitaLand’s new project is already 100 percent occupied.

ESR Investment Reported

With the China market facing new waves of financial shock, GIC has been amping up its India presence in the last year, with the fund late last month tying up with US private equity giant TPG to purchase a stake in an Indian hospital chain for $72 million.

GIC was also reported in August to be in talks to acquire a partial stake in a pair of India commercial real estate portfolios from Blackstone.

In addition to GIC having backed ESR’s $600 million core logistics venture in India last November, the sovereign fund was also reported by Indian media last month to be negotiating the purchase of a majority stake in the industrial developer and fund manager’s India operation.

In a deal said to be valued at $400 million, GIC would be buying into ESR India, a joint venture with Pimco Prime, which owns 6 million square feet of warehouses with another 4 million in development, and was set up in 2018.

Sources at ESR and Pimco Prime denied that any deal was imminent, while GIC had not responded to inquiries from Mingtiandi by the time of publication.