Canada’s Brookfield Asset Management Inc. has entered into exclusive talks with Essar Group to acquire the Equinox Business Park in Mumbai’s Bandra-Kurla Complex, after a Rs2,400-crore deal with commercial realty firm RMZ Corp. fell through last month, according to two people aware of the development.
RMZ Corp. announced in February last year that it had signed a definitive agreement with Essar Realty, which currently owns the 1.25 million sq. ft office space, to acquire the property. However, the deal fell through as the parties could not agree on the final terms, said an official who did not want to be identified.
RMZ Corp.’s corporate chairman Raj Menda confirmed that the deal with Essar had been called off. “We have come to an agreement that at the current position if they (Essar) have any buyer, they can go ahead and sell it,” he said.
Brookfield and Essar have signed an exclusivity agreement and started discussions regarding the deal, said the first person, adding that due diligence was currently underway.
An Essar Realty spokesperson declined to comment, while an email sent to Brookfield Asset Managment, to seek confirmation on the development, remained unanswered till press time.
Since November, Essar has been talking to potential buyers and investors for the sale of the business park which houses four commercial towers apart from other facilities, according to the second person mentioned above, who also declined to be identified.
“Equinox is upbeat about being able to sell 100% of its stake in the property at a higher valuation,” said the person, adding that the company expects to close a deal by next year.
The past few years have seen Brookfield aggressively looking to expand its portfolio in the country, both in the residential and commercial segments. Last year, the company signed one of the largest commercial real estate deals in recent years by acquiring the office and retail assets of Hiranandani Developers Pvt. Ltd for close to $1 billion.
While Singapore’s sovereign wealth fund GIC Pte. Ltd and private equity firm Blackstone Group Lp are the top two global investors in India’s real estate market, Brookfield Asset Management is fast catching up.
Globally, the company manages about $240 billion in assets. In India, it has so far built a $2 billion asset base over the past six years, across real estate and infrastructure projects.
“Global investors are in a race as grade A commercial properties with good quality tenants are in short supply. There’s a lot of potential with such properties from a business perspective. And scale is what everyone wants. Hence, most of the global PE firms are looking to build a successful portfolio overall,” said Neeraj Bansal, partner and head of real estate at consulting firm KPMG.
With the potential of REIT (Real Estate Investment Trust) as an exit option, commercial real estate in India has become an attractive investment for several big investors,” he said.
Source: Mint