GIC, Xander Buy India Business Park from Pimco Prime JV for $260M

Private equity firm Xander Investment Management announced on Wednesday that a partnership involving the company has acquired the Waverock office campus in the southern India city of Hyderabad from a Shapoorji Pallonji Group fund for INR 22 billion ($260 million), in one of India’s largest real estate transactions this year.

The Singapore and India-based fund manager has teamed up for the acquisition with Singapore sovereign fund GIC, according to sources familiar with the transaction who spoke with Mingtiandi, with Shapoorji Pallonji Group having jointly owned the 2.4 million square foot (223,000 square metre) property with a fund managed by Pimco Prime Real Estate (formerly Allianz Real Estate).

“Waverock is a valuable addition to our existing office portfolio in India and will enable us to offer existing and new tenants, premium space in another gateway Indian city,” Xander partner Arpit Singh said in a release on Wednesday.

The acquisition marks GIC’s second time investing in the Hyderabad office development after the sovereign fund in 2015 had purchased a half stake in the Tishman Speyer-developed project from the Manhattan-based developer for a reported INR 10 billion (then $141 million). That joint venture sold Waverock to Shapoorji Pallonji and Allianz Real Estate for $250 million in 2019.

Betting on Tech Hub

The acquisition comes as tenants leased 1.37 million gross square feet of Hyderabad’s office space in the first quarter, according to consultancy JLL, with that figure representing a 40.4 percent increase from the previous year. Gross take-up of grade-A office space in the city during the period reached 2.9 million square feet, a 123 percent year-on-year increase, according to Colliers.

GIC and Xander are paying around $108 per square foot to acquire TSI Business Parks (Hyderabad) Pte Ltd, which owns and operates Waverock, from SPREF II Pte Ltd, an India office investment vehicle set up in 2017 by Allianz Real Estate and Shapoorji Pallonji, one of India’s largest conglomerates.

On a US dollar basis, that price is 4 percent higher than the $250 million ($104 per square foot) price SPREF II Pte Ltd paid to acquire the asset in December 2019 from the GIC-Tishman Speyer JV.

“This transaction underlines the inherent attractiveness of the Indian Real Estate market,” Rajesh Agarwal, chief executive of Shapoorji Pallonji Investment Advisors said in a release. “It also highlights our team’s vast experience to acquire good assets and enhance their value towards providing profitable exits to our institutional investor partners.”

Mingtiandi reported in October that GIC had agreed to purchase Waverock for a reported INR 21.5 billion ($259 million), with Xander disclosing its role this week, now that the transaction has completed.

Located in Hyderabad’s Gachibowli commercial hub, a high-growth corridor that is already home to Microsoft, Franklin Templeton and UBS, Waverock is nearly 100 percent occupied and counts Apple, Accenture, Singaporean bank DBS, and Indian IT firm Tata Consultancy Services among its tenants.

The four-tower grade-A complex was completed in 2017 and benefits from access to the Gachibowli Expressway and the city’s Outer Ring Road. The project has also achieved the sustainability credentials increasingly demanded by international occupiers, including having attained Gold certification under the US Green Building Council’s LEED system, as well as Platinum certification by the Indian Green Building Council.

“We continue to expand our investment footprint with thoughtful, market leading assets,” said Singh. “Our extensive, on-ground operating expertise, global tenant relationships and pan-India scale positions us well to serve India’s burgeoning economy as the nation becomes the world’s knowledge center across industries, and its workforce demands high quality infrastructure to service the global economy.”

Xander, which has been investing in India for two decades, has acquired or developed over 100 million square feet of properties across a range of sectors, including office, retail, industrial, budget and luxury hotels, warehouses, residential condominiums and townships. Those investments are part of the $5 billion of capital that Xander Group has deployed into the Indian market since 2005.

India Offices In Vogue

The acquisition comes as India’s top seven office markets, which includes Hyderabad, the National Capital Region around Delhi, Mumbai, Bengaluru, Chennai, Pune and Kolkata, collectively saw 15.16 million square feet of gross leasing in the first quarter, according to JLL. That volume represents an increase of 13.8 percent from the same period last year and marks the third consecutive quarter that gross leasing in India’s major markets surpassed the 15 million square feet mark.

“The India office market has proven to be extremely resilient and investors consistently share this view,” said Stuart Crow, chief executive of Asia Pacific capital markets at JLL, which along with Mumbai-based Anarock Capital served as joint advisers to SPREF II Pte Ltd on the sale. “Coupled with the fact that Waverock has a long track record of high occupancy and rental outperformance, international investors were naturally attracted to the fundamentals and growth prospects of this piece of the Indian market.”

The purchase by GIC and Xander comes just weeks after CapitaLand India Trust signed a forward purchase agreement with Indian builder Phoenix Group for a business park in Hyderabad. The deal for that 2.5 million square foot facility sets up the SGX-listed REIT sponsored by CapitaLand Investment for its 13th business park in the southern India city.

Last month, Houston-based builder and fund manager Hines announced a partnership with India’s Pioneer Urban to develop a Gurugram office property at a total project cost of INR 15 billion ($180 million).

Those cross-border deals came after Cushman & Wakefield in January partnered with Mumbai-based Nuvama Asset Management on a fund management platform aiming to raise INR 30 billion ($361.4 million) to invest in prime office properties across Hyderabad and other major Indian cities.