The real estate private equity arm of global investment firm The Xander Group Inc. has decided to invest $350 million (Rs 2,600 crore) to develop and acquire office space in Hyderabad.
Xander Investment Management Pte Ltd has signed a pact with Hyderabad developer Phoenix Group for office buildings covering an area of 4.5 million square feet in the financial district at Gachibowli, Xander Group said in a statement.
The buildings will be delivered in phases between 2020 and 2023, and will house at least 50,000 employees from the information technology and financial services sectors.
Xander has been seeking to expand its portfolio of office buildings, a segment where it competes with the likes of private equity giant Blackstone. Xander has been looking for properties in the southern Indian cities. It reportedly bought an office building in Bengaluru earlier this year and was in the race for a special economic zone in Chennai.
The deal with Phoenix--like many other recent transactions in India's commercial real estate segment--has been structured as a forward purchase. This arrangement allows an investor to commit capital early on in the project development cycle and acquire it after completion.
Arpit Singh, principal at Xander Investment, said the “develop-to-core” acquisition in Hyderabad fits well with the firm's existing office portfolio.
“At this point in the cycle, the risk/return metrics that many office development opportunities present are attractive...We intend to expand our develop-to-core office investment strategy as the right opportunities present themselves,” he added.
Avinash Chukkapalli, director at Phoenix Group, said the company is looking to establish long-term partnerships with land owners, tenants, customers and strategic investors to develop real estate projects in Hyderabad.
Phoenix Group has presence across commercial, retail and residential properties. It also has presence in automobile, mining and power sectors.
Xander Investment has been actively investing in India for 13 years. It has acquired or developed about 81 million square feet of real estate across the office, retail, industrial, hospitality, warehousing, and residential segments.
Xander Group focuses on emerging markets. Since 2005, the firm has committed more than $3 billion to India across private, public, credit and venture investments.