Ascendas India Trust (a-iTrust), an Indian property trust managed by Singapore-based Ascendas Property Fund Trustee Private Limited, has inked a deal to acquire phase II of Pune-based IT/ITES SEZ christened BlueRidge, which is currently under-construction, for up to Rs 640 crore ($100.5 million), according to a press release.
BlueRidge IT/ITES is a project by realty developer Paranjape Schemes (Construction), being developed in two stages. Earlier in May last year, Paranjape Schemes (Constructions) agreed to divest 100 per cent stake in BlueRidge SEZ Phase I, with total leased space of 1.45 million sq ft, to IDFC Alternatives for Rs 450 crore.
Phase II is expected to be completed by the second half of 2015.
As part of the proposed two-tiered conditional deal, Ascendas has signed an agreement to initially subscribe for non-convertible debentures issued by Flagship Developers Private Limited (FDPL), the co-developer of BlueRidge Phase II, amounting to around Rs 260 crore ($40.5 million) to support further construction.
The NCDs carry a tenure of 10 years from the date of issue with interest servicing on a quarterly basis.
However, if the developer fails to meet the minimum leasing threshold of 65 per cent, or any other event defined in the agreement, the fund will have the right to call for repayment of NCDs.
In the second stage, conditional upon at least 65 per cent of the property being leased out, Ascendas would acquire all the outstanding share of FDPL by December 2016. The existing shareholders of the co-developer can also dilute their stakes before December 31, 2016 if BlueRidge Phase II attains 90 per cent or a higher leasing level, it added.
It said the total purchase price (including the subscription to NCDs) is expected to be under Rs 640 crore ($100 million).
The property is located in Hinjewadi Phase 1, a locality housing a bunch of IT companies such as TCS, Cognizant and Accenture.
The under-construction property has a super built up space of 1.5 million sq ft and on the completion of the deal, Ascendas' portfolio of operating space in India will increase from 7.5 million sq ft to 9 million sq ft.
The move would also diversify the geographical risk of Ascendas in India. Currently its portfolio is heavily tilted towards Bangalore, which also happens to be the Indian headquarters of Ascendas.
Close to half of its current portfolio is in Bangalore with the rest almost equally split between Chennai and Hyderabad.
Post this deal, Bangalore would comprise 37.6 per cent of the portfolio followed by Hyderabad (23.7 per cent), Chennai (21.8 per cent) and Pune (16.9 per cent).
“The acquisition would help a-iTrust to scale up operations to 9 million sq ft. It would also mark a-iTrust’s entry into Pune, an important market for its existing and potential clients. We expect the transaction to enhance earnings for unit holders,” CEO of Ascendas Property Fund, Sanjeev Dasgupta, said.
Earlier media reports said Blackstone is in advanced talks to buy the entire IT SEZ from IDFC Alternatives and Paranjape Schemes for around Rs 1,000 crore.