Canadian firm Brookfield Asset Management has emerged as the front-runner among several suitors to acquire Hiranandani Group’s commercial assets at Powai in Mumbai in what would be the biggest transaction in the Indian real estate sector, people familiar with the matter said.
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 transaction has been in the works for five to six months, a senior executive at a leading real estate consultancy firm said, asking not to be identified. “Brookfield it is leading the race,†the person said, adding that he wasn’t sure if the firm had agreed to buy the property.
Another person close to the development said the deal does not include any retail space. “It is only for commercial assets at a value of roughly Rs 15,000 per sq ft,†he added.
Other global investors in the race for the deal include 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.
Macquarie Capital has the mandate for the transaction for the developer. An email written to the company to gather more on the deal did not immediately elicit any response. Separately email queries to Brookfield and Hiranandani also didn’t receive any response till the time of filing this report.
Earlier in the day, The Times of India reported, citing two people familiar with the matter, that Brookfield is likely to acquire 100% ownership of the 4.5 million-sq-ft business park for $1 billion (Rs 6,700 crore). It also said that Canadian pension fund CPPIB and Blackstone were the other potential buyers in the fray.
The Economic Times, which also reported the development citing two people it didn't name, said this deal will clear the way for a transaction that was in the process to restructure the partnership firm of the Hiranandani brothers Niranjan and Surendra.
The Mumbai-based developer has presence across commercial, residential, hospitality and education segments. Its projects include Hiranandani Gardens (Powai), Hiranandani Meadows (Thane) and Hiranandani Estate (Thane), besides Hiranandani Business Park in Powai.
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,†said the second executive cited above.
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.
The deal, if it goes through, would also be the biggest M&A in the country's commercial real estate market after Qatar-backed RMZ Corp's recent acquisition of Equinox Business Park from Essar for Rs 2,400 crore in the Kurla suburbs of Mumbai.
This would be 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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