Brookfield, Hiranandani in India’s largest commercial space deal

Source: Business Standard, Oct 07, 2016

Mumbai: In the largest commercial property deal in the country, Mumbai-based Hiranandani group has signed an agreement with Canada’s Brookfield Asset Management to sell its 4 million sq ft of office and retail space in Powai. The deal is estimated at about $1 billion (Rs 6,700 crore), said a source.

“It is part of succession planning in the family as brothers are pursuing their own interests,” the sources said. Hiranandani group, a 50:50 partnership between Niranjan and Surendra Hiranandani, still owns 0.5 million sq ft of office space in Powai and is developing 3,000 apartments in the suburb. The group is developing 5 million sq ft of office space across the country. A Hiranandani spokesperson confirmed the development.

The company, which owns 2,000 acres, has plans of floating a REIT (real estate investment trust) comprising its upcoming projects, the spokesperson said. “We are creating a separate special purpose vehicle. It would take three to four months,” the spokesperson said.

“It’s a fully priced deal. They would have built the assets over the years and expected a fair value for it,” said Rubi Arya, vice-chairman at Milestone Capital, a fund management firm.

In 2014, Brookfield bought four SEZs owned by Unitech Corporate Parks for Rs 3,500 crore and two other assets in the country.

Among other high-profile transactions in real estate space, developers such as DLF, K Raheja Corp, Prestige and others are looking to raise $3.5 billion from selling stake in their office space arms.

While Blackstone invested over $3 billion in office properties, GIC invested more than $1 billion. Among others, Canada’s CPPIB has signed a venture with Shapoorji Pallonji group to invest in office projects. It has bought an infotech park in Chennai.According to property consultant Colliers, the Indian office market remained strong in the second quarter of 2016 with absorption of 10.4 million sq ft of office space, taking the total to 19.2 million sq ft year-to-date.

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