The Government of Singapore-owned investment corporation GIC is buying Waverock, a commercial SEZ development in Hyderabad, for ₹2,150 crore from SPREF II Pte, a collaboration between Allianz Real Estate and Shapoorji Pallonji Group, which is exiting the investment.
In 2019, SPREF II acquired the same asset from GIC and Tishman Speyer for ₹1,750 crore. The return on it (excluding payouts and annuities received) is 22.8 per cent, but in US dollar terms, there has been very little return as it works out to $250 million in both transactions.
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The SP-Allianz platform would have received annuity income in the form of rentals, which has four office towers with a total leasable area of 2.4 million sq ft. It has some well-known tenants, such as Apple, TCS, Accenture, DBS, and GAP.
The platform has also paid out dividends worth ₹400 crore during the tenure of its ownership. SPREF II Pte was formed in 2017 with the intent to invest in commercial office properties in India, and had a commitment of $500 million from investors, which included Canada Pension Plan Investment Board as a limited partner.
Both Shapoorji Pallonji Group and GIC did not respond to e-mails sent to them seeking clarification on the transaction.
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Analysts said the investment had shown decent returns over four years in local currency terms on the asset, as it had been a rupee-denominated fund.
Incidentally, this is another major exit for Allianz Real Estate, which is also selling its stake in ESR India, an equal joint venture between it and APAC-focussed ESR group. Market watchers said the exits were a function of the tenure of the investment, and the fact that Allianz, as an insurer, would have commitments to its investors.
The buyer in both cases is GIC, which is very bullish on the office market in India. In May, when GIC and Brookfield India REIT entered into a partnership to acquire two prime commercial assets in Mumbai from Brookfield Asset Management, the wealth fund said that it expected growth in the Indian office sector to continue “driven by an established IT industry, increased focus by global corporations on digital adoption, and the availability of skilled talent”. It said the acquisitions were a testament to its confidence in the India office sector and the economy as well.