Top warehousing companies such as Indospace and LOGOS India are looking to monetise a couple of assets, persons in the know have indicated to FE. LOGOS India is initiating the sale process to sell two of its assets in Chennai and Luhari in Haryana, they said, adding, “They have sent feelers to some buyers.” The sale of the properties could fetch an estimated Rs 1,800 crore.
The sale by LOGOS follows the merger with ESR in Asian countries including India. “Hence they are looking to monetise some of the assets,” the persons explained. ESR is an Asia Pacific-focused asset manager for new economy sectors such as logistics and data centres.A mail sent to LOGOS India did not elicit any response until the time of going to press.
LOGOS India had planned to raise a of nearly $300 million (around Rs 2,490 crore) from global investors to fund its development plans in the March quarter, Mehul Shah, CEO told FE in an interview earlier this year. The company plans to develop 2.5 million square feet and deploy Rs 600-700 crore annually in the next three years, Shah had said. Indospace, sponsored by PE firm Everstone and Realterm , is looking to sell assets in Sri City in Andhra Pradesh, Bengaluru and Ranjangaon in Pune, sources said. According to estimates, the value of these assets is Rs 900-1,000 crore.
An email sent to Indospace remained unanswered. IndoSpace has the largest national network of 52 logistics parks with 58 million sq ft delivered/ under development across 11 cities, according to its website. “Investors are telling companies to liquidate assets as rents are not going up much and costs have remained high,” said the head of a warehousing company who did not want to be named. While land costs have gone up by an estimated 50-60% in the last two years, rents have moved up in single digits.
He pointed out that while listed real estate investment trusts or REITs are trading at a yield of 6.8- 7%, listed InvITs are trading at a yields closer to 8%. “So IPOs and InvITs have become the second option for warehousing companies, selling assets remains the first,” he said. According to ratings firm Icra, the average annual rental growth witnessed was 4% in FY24 and the same is expected to be in the range of 4-5% for FY25.
“The increasing construction cost and rising land prices remain the key challenges for players, notwithstanding the favourable growth prospects,” said Tushar L Bharambe, assistant VP, Icra.Bharambe attributed the range-bound rentals to competition from the presence of many domestic and global players and emergence of new micro markets.Thus, land cost remains a critical factor in deciding the profitability and returns from a warehousing project.
Icra estimates the industrial and warehouse logistics park (IWLP) supply to grow by 13-14% in FY25 in the eight primary markets to around 424 million sq ft. Moreover, absorption is estimated to increase to 47 million sq ft in FY25 (90% of incremental supply addition) from 37 million sq ft in FY24, supported by strong consumption-led demand. The vacancy in the eight primary markets stood at 10% in FY2024 and is likely to remain at a similar level in FY2025.