PE Blackstone, Panchshil Realty bid Rs 186 cr for Citi’s BKC property

Pune-based Panchshil Realty and US-based private equity giant Blackstone have emerged front-runners for buying Citibank’s old headquarters at the Bandra-Kurla Complex, Mumbai’s prime business district. They have jointly bid Rs 186 crore.

Citibank had put this building on the block last year and appointed CBRE group as its consultant.

According to sources, the company was expecting Rs 300-350 crore, valuing the current bid about 37 per cent lower at Rs 22,000 per square feet.

The seven-floor building, Citigroup Centre, spread over 84,000 sq.ft, served as the investment bank’s India headquarters until April last year. Thereafter, the bank shifted a block away to its new location — the 2.97-lakh-sq-ft First International Finance Centre purchased for Rs 985 crore.

A person familiar with the development said it made sense for the bank to monetise its real estate assets and make efficient use of its capital.

However, when contacted, the bank declined to comment while CBRE Chairman and Managing Director Anshuman Magazine said it was too early to say anything on the deal.

According to industry experts, companies have of late stepped up efforts to sell their non-core realty assets even as they also buy properties that offer a good deal.

Ramesh Nair, Chief Operating Officer, Business, Jones Lang LaSalle India, said: “Today many corporates want to divest their non-core realty assets and use the funds for their core business as returns on capital employed are more than the returns from real estate.

“At the same time many companies are also using this as an opportunity to buy core real estate assets such as headquarters in a city like Mumbai which has seen only a marginal increase in price of about 5 per cent in 2013 against a 150 per cent jump in the official rental market from 2004 to 2008.”

For the Panchshil-Blackstone combine, this is the second tender after they jointly bid to buy Express Towers in Mumbai’s Nariman Point from ICICI Venture and Viveck Goenka for about Rs 900 crore.

Sanjay Dutt, Executive Managing Director, South Asia, Cushman and Wakefield, said: “The first quarter of every year usually is referred to as a fire sale period when people who had long been fence sitting, get tired of waiting and want to give a good valuation to close deals.

“These people include landlords, developers and sellers of corporate property.”

“Though IDFC and Xander too have done deals in the commercial lease space, Blackstone has emerged most aggressive by doing consistently more deals over the last one-two years. This trend is likely to continue this year as well,” he added.

manisha.jha@thehindu.co.in

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