Private equity giant Blackstone has signed a binding term sheet with Bengaluru-based Prestige Project Estates to acquire a bunch of commercial, retail and hotel properties in India’s third-biggest real estate deal, the developer said in a statement.
The proposed deal includes six completed office assets, nine malls, two hotels and four under-construction office projects.
Blackstone will acquire up to 100% stake in completed office assets, 85-87% stake in retail assets, up to 50% in under-construction office assets and 85-100% in hotel properties.
The investor is paying Rs 9,160 crore ($1.23 billion) for the assets, making it one of the biggest deals in India’s real estate market.
The statement said that the developer, sitting on a debt pile, will use the proceeds to fuel the next phase of growth.
Last month, Prestige had signed a non-binding agreement with the investor to sell the assets.
This is Prestige’s second attempt at monetising its rent-yielding assets through a mega deal. In 2018, it had signed a term sheet with GIC for a deal to pick up stakes across a bunch of projects, but it fell through because of a valuation mismatch.
In fact, the developer has been preparing for a deal for its rental assets for quite some time. In the last 2-3 years, it has streamlined a lot of its projects and bought out investors across special purpose vehicles (SPVs) in the run-up to this mega deal.
In the residential segment, Prestige has so far completed 89 million square feet while its under-construction portfolio is roughly 32 million sq ft.
In the commercial segment, it has delivered 36 million sq ft while the under-construction portfolio is 15 million sq ft.
The developer has launched back-to-back projects in recent months in the residential segment. Over the last two months, it has launched Waterford in Whitefield, Bengaluru; Prestige Ocean Crest in Goa; and Prestige Primrose Hills in Bengaluru.
Blackstone is one of the world’s leading investment firms. In April last year, Blackstone-sponsored REIT Embassy Office Parks made its debut on bourses, giving the country its first publicly listed REIT (real estate investment trust).
Its second co-sponsored REIT – Mindspace REIT -- made a strong debut in early August this year.
The firm has a separate vertical for retail assets housed under Nexus Malls. Currently, there are nine malls under the Nexus Malls portfolio, spanning 5.5 million sq ft of Grade A retail space in India.
Recently, it set up a platform with Hiranandani Group to develop and manage warehousing assets in the country.
The Prestige-Blackstone deal marks a significant development in India’s real estate market at a time when the work-from-home trend is looming over rent-yielding office assets. The ecosystem will also soon see the completion of India’s biggest real estate deal with Canada’s Brookfield acquiring a bunch of office and co-working assets from Bengaluru developer RMZ.
The second-biggest transaction saw GIC, Singapore government’s investment arm, sealing a deal for DLF’s rental arm for $1.3 billion.