Edelweiss Alternatives, the alternative asset arm of the Edelweiss Group, has acquired MFAR Developers’ 1.1-million-sq-ft information technology park in Bengaluru for over Rs 1,500 crore.
This is the largest and first transaction for a complete buyout of office towers so far this year. Edelweiss Alternatives has bought this asset through its rental fund, which is currently in the process of raising Rs 5,000 crore.
On March 3, ET was first to report that Edelweiss is set to buy this asset and the deal was expected to be registered in a few days.
MFAR Manyata Techpark is a 1.6 million sq ft commercial complex with four independent towers within the large ecosystem of Embassy Manyata built on 12.5 acres of land parcel. The current deal includes three out of these four towers in the complex.
The entire Embassy Manyata is a development spread over more than 108 acres. The other owners of the project include Embassy REIT and other strata owners. The property is fully managed by MFAR Group and is currently more than 90% leased.
Among the three towers acquired, the largest one is a 12-storey office building with around 1 million sq ft space, which is in north Bengaluru’s Hebbal locality along Bellary Road and Outer Ring Road (ORR).
This is an independent asset within an ecosystem of large integrated mixed-use development. Some floors of this tower are strata owned and therefore are not part of this deal.
Lease rentals at the property currently hovers around Rs 100 per sq ft a month. It is occupied by multinational and domestic companies with business presence across technology, banking, financial services & insurance, automobile, consulting and ITeS. It counts companies like Bayer and IQVIA among its key tenants.
ET’s email query to MFAR remained unanswered. The transaction’s lead advisor investment bank Credberg and the other advisor JLL India declined to comment.
With this deal, assets of the Rental Yield Plus Fund have risen to over Rs 2,500 crore, said Subahoo Chordia, Head of Real Assets Strategy, Edelweiss Alternatives while adding that the fund is seeing interest from global and domestic institutional investors, UHNIs and family offices for investments in office assets in India.
The fund is planning to primarily target markets in southern India such as Bengaluru and Hyderabad, alongside major markets like Delhi-NCR and Mumbai, with plans to build a 10-million-sq-ft portfolio within three years.
This fund will seek out and invest in quality commercial office properties in six major metros in the country. It will look to offer attractive investment opportunities, as a pre-REITs strategy, to investors eyeing rental income and capital appreciation.
Net absorption in India’s top seven office markets breached the 40 million sq ft mark and stood at 41.97 million sq ft in 2023, showed data from JLL India.
This not only marked a new post-COVID milestone but also positions it as the second highest annual absorption, trailing only the levels recorded in 2019.
Institutional investors are expressing strong confidence in the Indian office sector, buoyed by its promising growth prospects and resilient demand. This optimism has fuelled a surge in activity with leading global and domestic funds finalising major deals.