Canada Pension Plan Investment Board (CPPIB), among the most active alternative investors in India’s real estate sector, and Tata Realty and Infrastructure Ltd have announced a new 50:50 joint venture with equity value of Rs 5,300 crore to develop commercial office space.
The total aggregate equity value of the joint venture will be Rs 5,300 crore (about $700 million), with Toronto-based CPPIB making an equity commitment of Rs 2,600 crore (about $342 million), the two firms said on Tuesday.
The joint venture will be seeded with two assets with a gross asset value of Rs 8,000 crore ($1.05 billion) alongside an intention to further allocate capital investment of up to Rs 2,000 crore ($263 million) for future acquisitions.
The two assets are Intellion Park in Chennai, with gross leasable area of 4.6 million square feet, and Intellion Edge in Gurgaon, with gross leasable area of 1.8 million square feet. These properties are currently owned and managed by Tata Realty, a wholly owned arm of Tata Sons.
Further, the JV will target stabilized and development assets, aiming to reach over Rs 5,000 crore in assets under management. The new entity will also pursue Grade A commercial developments in key gateway cities such as Mumbai, Delhi, Pune, Bengaluru, Hyderabad, and Chennai.
TATA Realty and Infrastructure Ltd, a 100% subsidiary of Tata Sons, has a portfolio of over 50 projects across 15 cities. It has developed ~16.8 mn. sq. ft. of commercial projects and has ~30 mn. sq. ft. of projects under development & planning.
With a strong foothold in Chennai, Gurugram, and Mumbai, TATA Realty and Infrastructure Limited aims to add 10 mn. sq. ft. in the next three years and move towards its goal of having a portfolio of 45 million sq. ft. by 2027.
“With CPP Investments as a strategic long-term partner, the vision of this joint venture is to provide world-class sustainable office space solutions to a diverse set of businesses. This will enable the opening up of new business opportunities for TATA Realty and Infrastructure Limited, allowing us to accelerate our current growth," said Sanjay Dutt, MD & CEO, Tata Realty and Infrastructure Ltd.
As on 31 December 2021, CPPIB's total portfolio stood at C$550.4 billion ($435 billion or Rs 33.10 lakh crore).
Last month, CPPIB partnered with Bengaluru-based realty firm RMZ Corp committing to invest around Rs 2,650 crore (around $355 million) to develop and acquire commercial projects across India.
“This new relationship with Tata Realty and Infrastructure Limited, one of India’s leading operators, provides an excellent avenue from which to explore opportunities in the fast-growing commercial real estate sector. It is an important step in expanding CPP Investments’ relationships with leaders in the market, to deliver solid long-term adjusted risk-adjusted returns to CPP contributors and beneficiaries," said Hari Krishna V, Managing Director, Head of Real Estate India, CPP Investments.
CPPIB has exposure to different asset classes in the Indian real estate market. Back in 2017, it had set up a platform with Mumbai-listed developer The Phoenix Mills for a play in India’s retail real estate market.
