Indiabulls Asset Management Company today said its Indiabulls Alternative Investment Fund (AIF) is planning to raise Rs 1,500 crore for maiden commercial assets platform. “This is Indiabulls Asset Management’s third real estate fund and its maiden commercial real estate fund after raising Rs 1,500 crore and deploying Rs 1,000 crore in the past two years under its residential strategy,” the company said in a statement issued here. The fund will have a five-year tenure with an option of extending it annually for two years. “Indiabulls Dual Advantage Commercial Asset Fund will seek investment opportunities in top commercial markets in the country, including Mumbai Metropolitan Region, Delhi-National Capital Region, Bengaluru, Pune, Chennai, Hyderabad and Kolkata,” the release said.
Investment targets would include Grade A office or commercial mixed use assets which are completed, pre-leased or have lease commitments while nearing completion, which would primarily help address risks related to approvals, construction and leasing.
The fund will target pre-tax IRRs of 16-17 per cent on a portfolio asset level by investing in Grade A commercial assets by leading developers with excellent tenant quality and long lease tenure.
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“We believe that it is a good time to enter the commercial real estate market given that most office markets are in the rental growth phase and the next 3-5 years will see robust rental and capital value appreciation through cap rate compression. This fund is a logical extension of our successful residential investment strategy,” company’s Group Executive Head and CEO Akshay Gupta said.
Commenting on the development, its CEO Private Equity Ambar Maheshwari said, “our commercial investment strategy intends to provide downside protection through recourse to completed asset, returns through existing rental yields and capital appreciation on exit.”
He further said the fund will target to achieve higher returns by implementing various strategies like the opportunity to bring rentals to market parity, repositioning asset to achieve higher rentals and innovative leverage and tax structures to plug leakages.