Home-grown real estate-focused private equity firm Milestone Capital Advisors has exited one of its early investments in Millennium Tower-I, a commercial property located in Salt Lake, Kolkata, the company said in a statement.
The PE firm had invested Rs 57 crore back in March, 2008, through its commercial rental yield fund IL&FS Milestone Fund I. It has exited the property at Rs 91 crore (including the rentals earned over the years) clocking a multiple of 1.6 times.
The property is spread across approximately 100,000 sq ft and is fully occupied by IT giant IBM.
Rubi Arya, executive vice chairman, Milestone Capital Advisors, said, “We are happy to conclude this exit especially in a difficult real estate market like Kolkata, which has high vacancy levels and declining capital rates. We have nurtured this prime asset for seven years and have earned a rental yield of 12 per cent per annum. We have recently renewed the lease agreement with IBM for a long tenure, thereby leading to divesting the asset at an investment multiple of 1.6 times to a high net-worth investor.”
She added that the deal indicates a positive HNI outlook towards such commercial assets that provide stable rental returns in addition to capital appreciation.
The last exit to come from the fund was in ACORN Logistics Park in Bhiwandi, Mumbai, at a multiple of 1.6 times in seven years. The company had exited the asset at $24 million.
The rental yield funds managed by the firm have investments of Rs 1,200 crore over four million sq ft of commercial properties, including offices, IT & ITeS parks, logistics and warehousing.
Clocking exits from vintage funds has been an important focus area of the PE firm in the last two years. It has divested assets across development and rental yield funds back to back in the recent past.
In the first seven months of financial year 2015, it returned roughly Rs 635 crore to its limited partners taking the total amount given back to investors since the inception of the company to Rs 2,000 crore. The recent exits include Godrej Properties in Kolkata at an exit value of Rs 200 crore; Grand Central Mall, Rajkot (a 165,000 sq ft mall); Platina, Gachibowli in Hyderabad (a mixed-use premium commercial space); Pelican Group (two residential projects of the developer); Assa House II (a residential project in Nagpur)
In terms of fundraising, it is amid scooping up capital for its tenth fund which has a corpus of Rs 500 crore and seeks to invest in residential properties in Tier I markets. Launched in September last year, the fund is yet to raise a substantial amount to hit first close.
Meanwhile, while it is out on the road to raise funds, two of its senior executives Navin Kumar (executive director) and Alok Aggarwal (chief executive officer and managing partner) have quit the company.