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Prestige Group in talks raise $400 million

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The fund raising is expected to be concluded over the next three months and will be a pre-cursor to listing of Prestige’s Real Estate Investment Trust (REIT), which is likely to take place over the next 12-15 months.

Realty developer Prestige Group is in talks with Canadian pension fund Ontario Teachers’ Pension Plan, Singapore-based diversified conglomerate Keppel Corporation and a Japanese institutional investor to raise around $400 million by monetising its portfolio of income-producing assets including office and retail properties, said three persons with direct knowledge of the development.

The fund raising is expected to be concluded over the next three months and will be a pre-cursor to listing of Prestige’s Real Estate Investment Trust (REIT), which is likely to take place over the next 12-15 months.

The new financial partner is likely to be an anchor investor for the proposed REIT issue. The fund raising is also expected to help the company in trimming its net debt, which stood at ₹8,674 crore as on December end.

Last month, Prestige raised around ₹436 crore through a preferential issue of equity shares to Singapore’s GIC-managed investment firm Gamnat. With this, GIC has bought an additional 3.4 per cent stake in the company taking its holding to nearly 9per cent .

“Currently the company earns rental income of around ₹1,000 crore cumulatively through both office and retail assets every year, pushing the valuation of this portfolio to ₹12,000 crore,” said one of the persons mentioned above.

The Bengaluru-based developer has office assets spread over 12.3 million sq ft, while its retail portfolio is spread over 4 million sq ft. Prestige Group has more than 36 million sq ft of under-construction and upcoming office properties. It also has six malls in the pipeline.

Apart from these existing operational commercial assets, the company is looking to add around 5 million sq ft rental assets over the next eight months. Of the total rental portfolio, the company is looking at carving out around 21 million sq ft portion for the proposed REIT issue by the end of financial year 2020-21. The company can also add 20per cent of the under construction properties.

Once listed, this is estimated to be the second largest REIT following the already listed Embassy Office Parks REIT. The other proposed issue includes K Raheja Corp’s Mindspace Business Parks REIT.

“The company is, however, yet to decide on whether they should combine retail and office together as the valuation for both the assets are different,” said the second person.

REIT is an investment trust that owns, manages and operates income-producing real estate assets. It allows individual investors to make investment in this platform and earn income in the form of rental yield and appreciation in the capital value of the property.

Global investors, including Blackstone Group, CPPIB, Singapore’s sovereign fund GIC, Goldman Sachs and Qatar Investment Authority have been investing in Indian realty assets for the past few years. In addition to this, more funds are eyeing investment and alliance opportunities here. 

Source: TNN

(Note: The story has been published without modifications to the text. Only the headline and intro have been changed.)

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