Sovereign investor GICBSE 0.58 % of Singapore has emerged frontrunner to buy a $200-million, or Rs 1,400-crore, stake in the tenanted office space unit of leading southern developer Prestige EstatesBSE -1.76 % Projects. GIC is expected to pick up slightly over 40% ownership in the rent-yielding 5-million-sqft office portfolio that counts JP Morgan, Cisco, Microsoft and Mylan as tenants, people directly aware of the matter said.
The Singapore investor has been one of the most active backers of Indian income yielding commercial real estate where it has poured in more than $2 billion, primarily into office buildings and shopping malls. Last year, GIC acquired a significant minority stake in the rental arm of the country’s largest developer DLF for $1.4 billion.
Canadian pension fund CPPIB was also in contention to buy into the business unit of Prestige Estates, which is listed on Mumbai with a market capitalization of $1.8 billion, or Rs 12,000 crore. Prestige Estates declined to comment on this report; GIC could not be reached.
Prestige, one among India’s top residential developers, has an overall rental portfolio of nearly 9 million sqft, including IT parks, SEZs, retail and hotels earning annualized income of about Rs 720 crore.
The deal with GIC involves mostly office-space portfolio in Bengaluru. In 2016, TOI was the first to report on Prestige appointing investment bankers to part sell its commercial assets portfolio as it looks to retire some of its Rs 5,800-crore debt. The company had restructured its commercial business into office, retail, hospitality and residential verticals the same year.
Prestige, seen as the country’s third largest residential player after Lodha Developers and DLF, is aggressively building up the rent-yielding commercial businesses, which have shown more resilience in recent years of tepid growth for the real estate sector. The company expects a more-than-doubling of this to Rs 1,400 crore by 2020 as its under-construction office buildings start rental yields and a spike in rents of its existing offices.