BPTP is buying back Merrill Lynch’s 49% stake in its Crest office building in Gurgaon for Rs.180 crore. The developer has its corporate office in the same building.
Merrill Lynch had invested Rs.100 crore in the project in 2007 at the peak of the real estate cycle in India. Now, Merrill Lynch’s Asian real estate assets, including those in India, are managed by Blackstone.
BPTP recently raised Rs.270 crore through lease rent discounting of the 625,000 sq ft office building in Gurgaon that has tenants such as Deloitte, Fidelity as well BPTP itself, a person close to the development said on condition of anonymity. The company is using a part of this money to buyback the stake from Merrill.
The asset is valued at Rs.530 crore, including a debt of Rs.170 crore. Net of debt, the value of the asset is Rs.360 crore. The source said BPTP has used the money raised to repay this debt.
Spokespersons of both the Blackstone and BPTP refused to comment.
Besides Merrill Lynch, other investors like Citi Property Investors and JP Morgan have bought stakes in BPTP’s projects as well as at the entity level. In 2008, Citi had invested Rs.640 crore to buy 40% stake in four of BPTP’s special economic zone projects.
While a number of private equity exits have already taken place in 2011, the number of exits is likely to soar in 2012. Property consultancy Jones Lang LaSalle said in a report last month that 2012 is likely to see $3-5 billion worth of exits by private equity funds that have invested in Indian real estate. A majority of these investments were made in 2005 and 2006 after the real estate sector in India was opened up for foreign direct investment.
Many of these investments, which were made for 5-7 years by the private equity funds, are now coming to the end of their cycle. In the last four years, private equity funds have already exited $3 billion worth of investments in real estate, which is about 23% of the total investments since 2005.
