Prestige to buyout partners in Bengaluru projects for Rs 1,400 crore

Prestige Estates Projects has acquired Red Fort India Real Estate Holdco’s 62.54% stake in Bengaluru’s Exora Business Park valued at around Rs 1,400 crore. The transaction would be one of the biggest in the commercial real estate sector in the recent past.

Irfan Razack- CMD Prestige Group confirmed the deal. As part of the acquisition the company has also got 2.13 mn sft of fully leased office space that generates rental of Rs 135 crore annually,” said Razack. Additionally Rs 250 crore worth residential stock was also part of the buyout.

ET Reported the transaction on June 5.

The Bangalore-based real estate firm submitted its letter of offer in March to Redfort Capital to acquire the business park. Prestige Group jointly developed the prime office space with Red Fort Capital and owns the remaining 37.46% stake in the property. Exora Business Park, located in Marathahalli, is spread over 22 acres.

“Post the acquisition prestige estate projects will hold 99 % stake in Exora directly and indirectly in Exora. This will strategically enhance our rental portfolio,” said Razack.

The fully leased out business park consists of three buildings with 3 million square feet of built-up area and 2.12 million sq. ft. of leasable area. It houses companies such as JP Morgan Chase, Schneider Electric, Juniper Networks, PricewaterhouseCoopers, Misys, Verizon and Xerox. “The acquisition will be completed in one or more tranches subject to certain condition by March 2016,” the company said in a BSE filing.

A slow property market over the last three years has given a huge opportunity to private equity and institutional investors to buy assets at good valuation across markets like Bangalore, Mumbai, Delhi-NCR. Some of the other funds like Brookfield, Xander Group, Blackstone Group, Canada Pension Fund, GIC Singapore and Morgan Stanley were also in the race to purchase the private equity fund’s holding.

Red Fort Capital, an international private equity fund focused on Indian real estate that manages $1 billion, had been exploring options to bring all its investments in office properties under a real estate investment trust and list it in Singapore. However, due to a delay in the listing, the company decided to cash out on its investment from the project. In addition to Exora, Red Fort Capital holds a significant stake in Red Fort Towers in New Delhi.

Private equity investments in real estate reached $2.8 billion between January and September this year, the highest since 2008. This is an increase of 84% over the corresponding period last year, according to global real estate consultant Cushman & Wakefield.

Currently Prestige has 64 on-going projects aggregating to 65 million square feet developable area and 33 upcoming projects aggregating to 40 million square feet of developable area spanning across Residential, Commercial, Retail and Hospitality sectors in major South Indian cities such as Bengaluru, Mysuru, Mangaluru, Chennai, Kochi, Hyderabad, Ooty, Goa, etc.