BHIVE Fund to raise Rs 400 crore to invest in commercial office projects

May 18, 2022

BHIVE Fund to raise Rs 400 crore to invest in commercial office projectsBHIVE Fund, an affiliate of flexible office real estate firm BHIVE Group, plans to raise a Rs 400 crore alternative investment fund (AIF) to invest in commercial office projects.

BHIVE CRE Opportunities Fund-Series I will be close-ended with a tenure of 5 years from the date of closure and extendable by 2 years.

“We have identified a unique opportunity post pandemic where many companies have vacated office space. We can buy un-lease properties at a discount, refurbish and rent them out. It also helps in regular income generation till assets are sold,” said Sheshagiri Rao Paplikar, CEO of BHIVE.Fund.

Currently, the category II AIF fund is under SEBI approval and has already received a commitment of Rs 200 crore, mainly from domestic investors, including family offices and ultra-high net-worth individuals.

BHIVE, the parent company, will be the sponsor of the fund and will invest in office properties with occupancy certificates ranging between 15,000 sq. ft. and 50,000 sq. ft. across Bangalore.

The fund offers an IRR of 20% over the investment with an 8-9% coupon to investors.

“The fund will operate at arm’s length and the company is putting together a three-member advisory board. The firm identified Rs 1300cr worth of assets for potential acquisition, “said Sandeep Gupta, investment manager, BHive Fund.

The fund’s first closing must take place within 90 days of SEBI approval, or on the date the fund receives aggregate capital commitments of at least Rs 20 crore.

The company’s investment arm, BHIVE fund, is in the process of raising $1 million of pre-series A investment to fuel its growth and has recently secured funding from Zerodha’s Nikhil Kamath.

Fractional ownership has emerged as a new way of investing in commercial real estate and has caused extensive rebranding in the real estate sector.

While the concept of fractional ownership in real estate has been prevalent in the US and European markets for a long time, it is now gaining traction in India.

“Fractional ownership has opened up new set of opportunities for retail investors. There are many transactions in the final stage of conclusion and are a mix of office and warehousing deals. Of late, fractional ownership has been gaining traction as it provides a unique opportunity to invest in real estate assets by pooling smaller investment amounts in the range of INR 10- 25 lakhs to buy multi-crore properties in prime locations. ” said Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.

After a gap of two years, vacancy across Grade A office markets across the top six cities has not increased for the first time, and remained stable at 18.5%.

In the Q1 of 2022, office gross absorption was up almost 3 times YoY at 13.0 million sq ft and supply doubled on a YoY basis to 14.3 million sq ft, mentioned Colliers.

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