Saturday, May 12, 2012
PE players place bids for Rs. 2,000crore realty project
The Private Equity funding giants including Blackstone, Morgan Stanley, IDFC and Singapore-based developer and investor Ascendas and Mapletree are among the players who have joined the race and put in bids for the Essar Group-backed Equinox Realty's commercial project involving an investment of Rs. 2,000cr. In the emerging scenario in case transaction materializes, it would be one of the biggest PE deals in commercial property. Recently, Ascendas bought a property in Hyderabad from Phoenix Infocity for Rs 855cr and Blackstone has also struck a deal for DLF's special economic zone (SEZ) in Pune entailing an investment of Rs 810cr. The project in question is located off the Bandra Kurla Complex with a development space of 1.2 million sq ft and has become one of the largest campuses in the area.
According to an insider, for Essar, it is a non-core asset for which funds are showing interest as it is half-rented and has a huge future business potential because of its location. The company had bought this property from the Ashok Piramal Group's Peninsula Land for Rs 1,100cr in 2007. Most of the big funds such as Blacktsone, Morgan Stanley and IDFC are looking at commercial properties due to stable returns and lower risk. According to market experts, in case one enters with 11% yield per annum with a 15% cost escalation one can easily make a return of 18 to 19%. They think it is better than taking development risks in residential projects and giving 24 to 25% returns to investors.