Brookfield Asset Management to sell commercial property to Brookfield India REIT, GIC for $1.4 billion

May 19, 2023

Brookfield Asset Management is to sell 6.5 million square feet of commercial property in India to its listed real estate investment trust, Brookfield India REIT, and Singapore’s GIC, in an equal partnership, for an enterprise value of $1.4 billion.

The properties being acquired are in Hiranandani Gardens in the suburb of Powai, and Candor TechSpace in Gurugram. GIC has committed around ₹3,500 crore towards the transaction and a similar amount will be raised by the REIT through a private placement, that will be used to fund the deal.

Businessline had earlier reported that Brookfield Asset Management was in talks with GIC for the sale of the assets it had acquired from the Hiranandani group in 2019.

Though Brookfield REIT had right of first offer for the assets, ownership has been restructured in order to facilitate the current transaction, which involves a partnership between the REIT and GIC. Brookfield REIT’s management said that these assets were in the pipeline for the last 12 months.

The management said that the deal value was at a 6 per cent discount to the gross asset value of the properties and at a 12 per cent discount to its own estimate of the net asset value based on an independent valuation. The properties had an income potential of over ₹900 crore.

The transaction will also increase the gross asset value of Brookfield India REIT to $3.5 billion and the net asset value to $2 billion. With a 35% increase in total leasable space and a 44% increase in operating area, the acquisition significantly scales the Brookfield India REIT portfolio, the management said, making it the second largest REIT in the country.

Under the terms of the transaction Brookfield India REIT will acquire 50 per cent of the share capital of Kairos Property Managers while the remaining half will be acquired by an affiliate of GIC. Kairos owns and operates nine completed buildings in Hiranandani, Powai spread over an area of 19.95 acres. The acquisition price of Kairos is ₹6,500 crore. In adidtion, Brookfield REIT will be subscribing to non-convertible debentures issued by Kairos for ₹175 crore.

Brookfield REIT and GIC will also acquire 50 per cent each of Candor G1 in Gurgaon for ₹4,725 crore.

In FY23 Brookfield REIT achieved gross leasing of 2.1 msf comprising 900,000 square feet of new leases and 1.3 msf of renewals. It also signed 400,000 square feet of expansion options. It recorded 11 per cent average escalation on 4.1 msf leased area.

In the year its net operating income rose 38 per cent on year to ₹960. 8 crore while income from operating lease rentals rose 28 per cent to ₹826.8 crore.

Leave a Comment