Indiabulls Real Estate to sell office property in Chennai to Blackstone for Rs 850cr

Indiabulls Real Estate (IBREL) on Friday announced sale of its office project in Chennai to global investor Blackstone for Rs 850 crore as part of its strategy to monetise commercial asset.

The company had in March this year sold 50 per cent stake in two prime commercial properties in Mumbai to Blackstone for Rs 4,750 crore.

In a filing to BSE, IBREL informed that a committee, constituted by the board, has authorised execution of definitive transaction documents with Blackstone group firms for divestment of its 100 per cent stake in its commercial assets at Ambattur, Chennai.

The deal will fetch a “gross value of approximately Rs 850 crore”, the company said, adding that this asset was non-core.

The transaction is expected to be completed in tranches by September 30, 2019.

The Chennai project ‘One Indiabulls Park’ is already complete with 1.9 million sq ft office space commanding an annual annuity revenue of Rs 85 crore.

The shareholders had given approval for re-organisation of its commercial leasing business in India for achieving sustainable growth and for further strengthening of its on-going businesses in core markets, the filing said.

“IBREL will maintain an asset light model, and do regular sales from its portfolio of owned and completed office properties to the rental platform with/of investors this will ensure predictable earnings, high cash flows and high return on equity (ROE) for the business of IBREL,” the Mumbai-based developer said in an analyst presentation recently.

In April 2017, Indiabulls had announced plans to restructure its business by creating a separate venture for commercial and leasing operations as part of efforts to focus on each segment. 

It planned to hive off commercial and leasing business into a separate entity Indiabulls Commercial Assets.

The US-based Blackstone directly and along with its joint venture partner Embassy group is currently holding huge commercial assets of over 60 million sq ft across major cities.

Unlike housing sector facing multi-year slowdown, India’s commercial real estate segment, particularly office asset, is doing fairly well and attracting huge investment from domestic as well as global investors.

Apart from Blackstone, global investors GIC and Brookfield have been buying commercial assets in India.

Essar group had in April this year sold prime commercial property Equinox Business Parks at Bandra-Kurla Complex (BKC) in Mumbai to Brookfield for Rs 2,400 crore.

At the fag end of last year, realty major DLF’s promoters concluded the sale of their 40 per cent stake in rental arm DLF Cyber City for nearly Rs 12,000 crore. This deal included sale of 33.34 per cent stake to Singapore’s sovereign wealth fund GIC for Rs 9,000 crore.

In September 2015, Godrej Properties had sold 4.35 lakh sq ft area in Godrej BKC project to Abbott for Rs 1,480 crore in one of the largest office space deals.