BENGALURU: India’s second-largest listed real estate developer Prestige Estates ProjectsBSE 0.74 % plans to raise at least $300 million, around Rs 2,000 crore, by selling up to 40% stake in its rent-yielding commercial assets and has drawn interest from Canadian Pension Plan and GIC of Singapore. The southern developer has hired JP Morgan to advise on the deal involving a string of shopping malls and office spaces valued at about Rs 5,000 crore, or $750 million, sources directly familiar with the matter said.
Prestige is likely to sell anywhere between 26% and 40% stake in the income-generating commercial unit, which will be a subsidiary of Prestige EstatesBSE 0.74 %. The Bengaluru- headquartered developer recently unveiled a business restructuring to separate residential and commercial assets. With the housing market remaining subdued, top builders are looking at unlocking value from commercial assets to manage cash flows and debt repayments. The country’s largest developer DLF in advanced discussions with global investors to sell a stake rental unit.
Prestige, which last year sold most number of residential units, has Rs 5,500crore debt on the books.
Prestige was unlikely to put all its commercial properties, especially hospitality assets, into the proposed transaction, sources said. The company -owned by brothers Irfan, Rezwan, and Noaman Razack -has annualized rentals of about Rs 550 crore being generated from office spaces and shopping malls. As of June 30, Prestige had 8.14-million sqft of leased office space yielding an annual rental income of Rs 412 crore, and mall portfolio of about 2.85 million sqft generating Rs 116.8 crore.
When contacted, Prestige Estates CFO Venkat K Narayana and JP Morgan declined to comment on speculation. Prestige shares climbed 2.7% in a falling Mumbai market to close at Rs 202 on Tuesday.
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Source: Economic Times