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Canadian firm Brookfield Asset Management is set to acquire Hiranandani Group’s offices and retail space in Powai for $1 billion (₹6,700 crore)
If the deal goes through, it will be one of the biggest M&As in the country’s commercial real estate market. Earlier this year, Qatar-backed RMZ Corp had acquired Equinox Business Park from Essar for ₹2,400 crore in the Kurla suburb of Mumbai.
The office and retail space, totalling about 4.5 million sq. ft, is part of Hiranandani Business Park and Hiranandani Gardens. It is jointly owned by the Hiranandani brothers Niranjan and Surendra.
When contacted, Hiranandani’s spokesperson said, “We were in the process of restructuring the partnership firm that holds the Powai assets into a corporate entity. Several players have approached us and Brookfield is one of them. However, nothing has been concluded.”
REIT listingThe spokesperson said the company was also looking to list the property under REIT, but since partnerships are prohibited in REIT, it was keen to convert it to a corporate entity. Industry sources said the deal is almost through.
Sumeet Abrol, Partner, Grant Thornton Advisory, said, “A deal of this nature confirms the appetite of global investors and shows that buyers are willing to take a risk for well-executed projects. This is a marque property, and for the buyers it guarantees a high-yielding return. From a REIT perspective, we believe that such anchor investments are good.”
Sources said the deal is priced at ₹15,000 per sq. ft. According to sources, the rental rate in the area is about ₹80-100 per sq. ft. “Commercial property deals are valued on rental capitalisation basis. A ₹15,000-per-sq-ft deal would translate into 8-10 per cent rent capitalisation..”
Pankaj Kapoor, Managing Director, Liases Foras, declined to comment on the specifics of the deal, but said he believed that the Hiranandanis may have got a good valuation “since they are a premium developer in a good locality.”
Eyeing realty sectorBrookfield has built a $2-billion asset base in India over the past couple of years across realty and infrastructure. It has been scouting around for opportunities to invest in the real estate sector.
Brookfield Asset Management has about $240 billion in assets under management globally. It has also a partnership with real estate firm Peninsula Land Ltd, which lends to residential project through its arm Peninsula Brookfield India Real Estate Fund.
In 2014, Brookfield had invested in Unitech Corporate Parks Plc, a portfolio of six assets including special economic zones and IT parks.
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