In the biggest deal that the Indian real estate market has seen in the recent past, Canadian firm Brookfield Asset Management has concluded its transaction with Mumbai-based Hiranandani Group to buy its commercial and retail assets in Powai for $1 billion (Rs 6,700 crore).
Multiple media reports said that Hiranandani Group, a partnership between Niranjan Hiranandani and Surendra Hiranandani, has sold its entire portfolio of 4.5 million sq ft through the deal that was inked on Thursday. Reports added while the agreement has been signed, the entire process will take anywhere between 4-5 months to reach closure.
The company is in the process of creating a special purpose vehicle (SPV) that would house these assets and then later transfer it to Brookfield. “The matter with Brookfield is closed. Transaction is closed in terms of understanding with them,†Mint quoted a spokesperson of Hiranandani Group as saying.
Separate emails sent to the spokespersons for Hiranandani Group and Brookfield to gather more on the transaction did not elicit any response at the time of filing this report.
Meanwhile, the deal has been in the works for a long time. In June VCCircle had reported that Brookfield had emerged as the front-runner among several suitors to acquire Hiranandani Group’s commercial assets at Powai in Mumbai.
Other global investors that were in the race for the property included Blackstone, one of the biggest owners of commercial space in India; Singapore's sovereign wealth fund GIC, which is ramping up its play in Indian real estate; and Ascendas Group, Singapore's office park specialist.
The Mumbai-based developer has presence across commercial, residential, hospitality and education segments. Its key projects include Hiranandani Gardens (Powai), Hiranandani Meadows (Thane) and Hiranandani Estate (Thane), besides Hiranandani Business Park in Powai.
The Hiranandani business park in Powai is one of the hottest suburban business districts in the country's financial capital and has offices of many top Indian and multinational corporations.
“The deal for the office park will be a monetisation exercise for the developer. They are cashing out of the asset as this is a good time to divest commercial assets given the momentum in the segment,†a senior executive of a consultancy firm had said.
Indeed, the commercial real estate segment in India has been making rapid strides with leasing activity picking up. The year 2015 ended with absorption of 54 million sq ft across top markets, prompting many developers to firm up plans for new launches. The commercial realty market, however, has been facing a dearth of Grade A stock, which allows current owners of office assets to charge a premium.
Brookfield’s deal with Hiranandani Group is the biggest M&A in the country's commercial real estate market. In another big-ticket transaction, Qatar-backed RMZ Corp recently acquired Equinox Business Park from Essar for Rs 2,400 crore in the Kurla suburbs of Mumbai.
This is the third Indian buyout deal by Brookfield after it bought Unitech Corporate Parks in June 2014 for over $347 million and Gammon India's road and power assets last year. Brookfield is a global alternative asset manager with $240 billion in assets under management, as per the information available on its website. The firm owns and operates assets with a focus on property, renewable energy, infrastructure and private equity.
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