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Blackstone in talks to buy commercial property portfolio from L&T for Rs 2.3k crore
The Economic Times  |  January 16, 2018

Kailash Babar Mumbai

US-based private equity player Blackstone Group is in advanced talks to acquire two commercial properties of L&T Realty, totalling 1.7 million sq ft, in a deal valued at Rs 2,300 crore, said two persons familiar with the development.

 

This portfolio of the real estate arm of engineering major Larsen & Toubro includes about 8 lakh sq ft of fully-leased commercial tower at the L&T premise in Powai suburb and another 9 lakh sq ft office block at the company's commercial project at Seawoods, in Navi Mumbai.

 

The Seawoods office tower — yet to be completely leased — will be acquired in phases, the people cited earlier told ET.

 

"The deal is expected to be inked by late February as due diligence is currently in its final stages," said one of the persons cited above, adding that L&T Realty will assist in further leasing at Seawoods commercial block.

 

Both L&T Realty and Blackstone Group declined to comment.

 

In 2016, Blackstone had bought a 1-million sq ft retail mall, adjacent to the office tower in Seawoods, from L&T Realty for over Rs 1,400 crore. L&T Realty's office block in Navi Mumbai is part of India's largest Transit Oriented Development Seawoods Grand Central, a mixed-use development area over 40 acres that includes the mall and other commercial spaces.

 

The persons cited earlier said Blackstone is acquiring these assets directly and not through existing joint ventures with Bengaluru-based Embassy Group and Pune's Panchshil Realty. The New York based institutional investor has acquired assets and stake in portfolios independently earlier too.

 

The commercial tower in Powai is completely leased and has JP Morgan Chase, Colgate-Palmolive and L&T Infotech among its tenants. Being a fully-leased property with long-term contracts, the Powai asset is valued at Rs 1,500 crore and has a capitalisation rate of about 8.5%.

 

Cap rate is ratio of net operating income of the property to its asset value.

 

Over the past few years, Blackstone has emerged as the most aggressive institutional investor in India's real estate sector, picking up properties across major cities in deals that are turning out to be benchmarks in the sector. The company owns India's biggest portfolio of income producing office assets, totaling over 31 million sq ft across key property markets of Noida, Mumbai, Pune and Bengaluru.

 

The private equity player established its India office in August 2005, and since then has committed over $6 billion to companies in the country. In its real estate portfolio, Blackstone has over total 19 companies that own 31 million sq ft across 18 operating office parks, and it has invested $2.7 billion in these assets. It also has 11 million sq ft of commercial space under development across the country.

 

Large global institutional investors including Blackstone Group, Brookfield Asset Management, GIC, Canada Pension Plan Investment Board, Goldman Sachs and Qatar Investment Authority have been investing aggressively in Indian real estate assets over the past few years.