Bengaluru-headquartered RMZ Corp has struck a deal to sell 12.5 million square feet (sq ft) of office and co-working assets across its portfolio to Canadian investor Brookfield Asset Management for $2 billion (Rs 14,673 crore), the real estate developer said in a statement.
The developer has sold 18% of its overall portfolio of 67 million sq ft in the biggest deal in the country’s real estate market.
Brookfield is known for sealing mega, big-ticket transactions in the country. Back in 2016, it had sealed a $1 billion transaction with Mumbai developer Hiranandani Group for a bunch of their assets. Its other deals in office space include Unitech Corporate Parks ($491 million), Essar Equinox Buisness Park ($360 million), Pune office building, and Waterstone Hotel and land parcel ($105 million).
In one of the biggest deals in India’s real estate market, GIC, Singapore government’s investment arm, sealed a deal for DLF’s rental arm for $1.3 billion.
Also, Blackstone, one of the biggest owners of commercial real estate in the country and the first to launch a REIT in India, has signed a term sheet with Bengaluru-developer Prestige Project Estates for its office, retail and hotel assets for around $1.7 billion, marking one of the biggest deals in the country.
Meanwhile, the development comes soon after VCCircle reported that the Canadian investor will not only lap up RMZ’s stabilised assets but also its co-working vertical.
The statement said that the deal will fuel RMZ's growth strategy. It aims to grow its real estate asset portfolio to 85 million sq ft from the current level of 67 million sq ft over the next six years.
The transacted 12.5 million sq ft covers select assets spread across Bengaluru and Chennai. A significant part of RMZ Ecoworld, a 14 million sq ft development, is at the core of this transaction and the deal includes the group's co-working business, CoWrks, the statement said.
"RMZ has decided to divest a part of our core portfolio across Bengaluru and Chennai to raise $2 billion of fresh capital. Upon divestment, RMZ is now amongst the only zero-debt real estate companies, globally. With this deal, we have ample headroom to achieve our next phase of growth that RMZ 2.0 has defined for us," said Manoj Menda, corporate chairman, RMZ.
“This real estate transaction is momentous for the commercial real estate industry, in light of its large scale at the right juncture. Also, it further accentuates the unabating strength and resilience of the commercial office business,” said Arshdeep Singh Sethi, managing director, RMZ.
The assets of RMZ are worth $10 billion.
The development comes at a time when the real estate market is going through a coronavirus-induced disruption. The 6-8 month freeze on business activities across the world has slowed down leasing activities. Despite challenges, office space stakeholders believe the demand will stabilise in a few quarters.
The successful launch and listing of Mindspace REIT during the pandemic has given confidence to investors, owners and stakeholders on the long term prospects of the sector.
Brookfield, which owns some of the biggest office developments in the country, has filed for a REIT listing with the market regulator. It is likely to go ahead with the REIT IPO by early next year.
In the last few months, the real estate ecosystem has also seen developers looking to sell a part of their rent-yielding portfolio either to monetise for further growth or to pare debt.
Debt has been a key factor in pushing developers to take the plunge and clean up their books.
Prestige has struck the deal with Blackstone to clear its debt which stands at about Rs 8,000 crore.