RMZ to acquire Essar Equinox business park in Rs 2,400 crore deal

BENGALURU: The Ruias of Essar are in advanced negotiations to sell their Equinox business park in Mumbai to southern real estate developer RMZ Corp for Rs 2,400 crore, or $360 million, according to multiple sources directly familiar with the matter.

This is biggest commercial real estate deal in Mumbai, and one of the largest in India in recent years, as billionaire brothers Shashi and Ravi Ruia are divesting non-core assets to pare Essar’s debt burden.

Essar’s 1.2 million sqft park, located adjacent to Bandra Kurla Complex, houses tenants like IDFC, Tata CommunicationsBSE -0.45 %, Crompton Greaves, Nissan and Lafarge, besides Essar companies. Bangalore based RMZ, which is backed by Qatar Investment Authority (QIA), will pay around Rs 19,000 per sqft for the deal.

RMZ is expected to conclude the deal in two equal tranches spread over a six month period. The 100% acquisition is contingent upon both parties “meeting certain milestones”. RMZ vice chairman, Manoj Menda, confirmed the deal making but declined to comment on details, when contacted. Essar declined comment.
“The deal shows an improvement of interest in commercial real estate and especially core rental yielding assets. The risks associated with such offices are much lower as they are fully constructed and there is no pressure of development and leasing,” Anshuman Magazine, chairman and managing director, CBRE South Asia, said.

Brookfield’s acquisition of Unitech Corporate Parks in a multi-layered deal is seen as the biggest acquisition in Indian office space market. While it paid Rs 2050 for majority control of six parks in NCR and Kolkata, it also paid an undisclosed amount to buy Unitech’s 40% holdings most of these assets.

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RMZ manages about 20 million sqft of office space across multiple cities currently, but is on the prowl for large acquisitions to build a 80 million sqft portfolio in the next five years.

“Discussions are in the final leg and the deal will carry an enterprise valuation of Rs 2,400 crore for Equinox,” sources cited earlier in the report said. Diversified conglomerate Essar had been mulling a divestment of its real estate business under Equinox brand for a while now.

It is in separate discussions to sell a luxury housing project in Bangalore to Salarpuria Sattva for just under $100 million, according to recent media reports.

RMZ’s acquisition is the latest in a series of high profile office space deals as large global investors like Blackstone, GIC of Singapore, Brookfield Asset Management, Canadian Pension Plan Investment Board and Middle East sovereign funds have chased down transaction opportunities.
They together acquired assets worth $3 billion during the last calendar year. India’s large grade A office buildings, riding on a robust services economy, has returned stable yields to investors in an otherwise volatile real estate market.

JLL India chairman and country head, Anuj Puri, said in spite of the various influences that shape up real estate markets across India, Mumbai’s inherent equity as India’s financial capital remains undiminished, and will continue to drive major decisions by corporates and investment houses.

In December last year, GIC of Singapore acquired 69% stake in Nirlon, which manages a 2 million sqft office park in in Goregaon suburb, for 1300 crore.

TOI reported two months ago about pharma MNC Abbott acquiring 4.35 lakh sqft in a commercial tower at BKC developed by Godrej Properties for Rs 1,479 crore. That was seen as the biggest transaction for any single user commercial real estate in India.

Brookfield’s acquisition of Unitech Corporate Parks in a multi-layered deal is seen as the biggest acquisition in Indian office space market. While it paid Rs 2050 for majority control of six parks in NCR and Kolkata, it also paid an undisclosed amount to buy Unitech’s 40% holdings most of these assets.

Embassy Office Parks, backed by Blackstone, acquired Vrindavan Tech Village in Bangalore for Rs 1950 crore, which was among the other big deals in office space consolidation moves.