MUMBAI: Blackstone Group, GIC of Singapore and Brookfield Asset Management have fired slightly over $1-billion separate bids to acquire a 40% stake in DLF’s commercial property unit that owns rent-yielding assets. The three heavyweight investors are among those who made offers as the deadline for filing bids ended last weekend, sources directly familiar with the matter said.
A consortium of Qatar and Abu Dhab is overeign funds, along with Kotak Realty Fund, is seen as the fourth bidder in the process.
DLF plans to sell a significant minority interest in DLF Cyber City Developers (DCCDL), which owns the leased commercial assets including office and retail space portfolio in the National Capital Region and in Kolkata. But the deal under negotiations exclude some of its retail assets, like the Mall of India in Noida and DLF Place in Saket, and the office buildings that house DLF corporate headquarters. The bids are essentially for a portfolio of around 25 million sq ft of tenanted space, mostly office buildings, sources added.
The three big investors are learnt to have made non-binding offers estimated at between $1-1.3 billion for the 40% stake, pegging DCCDL’s equity valuation (excluding debt) at about $2.5 billion.
Another possible suitor, Canadian Pension Plan Investment Board along with local partner Shapoorji Pallonji, evaluated the deal before dropping it, sources added.
A DLF spokesperson said he would not be able to comment on the bidding process. The deal-making is a precursor to DLF’s plans to list the rent-yielding assets through a real estate investment trust (REIT) after roping in a marquee global investor. Brookfield Asset Management and Blackstone Group declined to comment, while GIC of Singapore could not be reached immediately. Morgan Stanley and JP Morgan are advising the stake sale under way.
One of the sources cited earlier said GIC was possibly a frontrunner to sew up the deal since it is already a large investor in multiple residential projects of DLF. Further, GIC, unlike rival bidders, also has a relatively smaller platform of rent-yielding Indian commercial assets. Nevertheless, DLF promoters are likely to favour the highest bidder as the country’s largest real estate developer looks to pare down and refinance debts pegged at around Rs 22,000 crore.
The world’s largest real estate investor Blackstone is on road to build a 50-million-sq-ft leased office space portfolio through two large joint ventures, which it bulked up through acquisitions. The DLF deal would provide Blackstone a complimentary footprint as the latter does not have any significant asset portfolio in NCR and Kolkata.
Similarly, Canadian investor Brookfield acquired UnitechBSE 8.39 % Corporate Parks through which it has 11 million sq ft of leased office space and a development potential of another 6 million sq ft. TOI recently reported that Brookfield is set to acquire a 4.5-million-sq-ft Hiranandani business park in Powai near Mumbai for $1 billion.
Qatar Investment Authority, a sovereign investor from the Middle East, is another prolific investor in Indian commercial real estate through a joint venture with southern developer RMZ. The DLF stake also offers an opportunity for new bulge-bracket investors to play in India’s maturing commercial realty market.
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