Canadian fund manager Brookfield is looking to sell three of its commercial properties to its listed real estate investment trust (REIT) — Brookfield India Real Estate Trust — and to an investor, sources said.
The deal is expected to happen at an enterprise value of up to $2 billion, sources said, adding that Brookfield is planning to sell 50% in the three of its assets to an investor for about $400-500 million and the rest to its listed REIT.
Brookfield is in talks with Singaporean fund GIC to sell 50%. However, this could not be independently verified.
When contacted, a Brookfield spokesperson said, “As a policy, we do not comment on speculation. We will make timely and appropriate disclosures, when required, in accordance with applicable law.”
The spokesperson further added that Brookfield remains committed to the REIT. Brookfield sponsor entities own approximately 53% as of September 30, 2022.
Also read: Jio Vs Airtel: Best broadband plans with Amazon, Netflix and other OTT subscriptions
The properties it is looking to sell are located in Powai and Gurugram, sources said.
The sale is part of Brookfield’s strategy of call option (identified assets as Brookfield calls them) and right of first offer (ROFO) properties.
Brookfield India REIT had two call option properties – Candor Techspace G1, Gurugram, and Candor Techspace, Noida, – of 8.3 million sq ft. Both were acquired from Unitech Corporate Parks in 2014. Call option properties mean they would be bought at a future date at a certain price.
In December last year, Brookfield India REIT bought Candor TechSpace N2 for `3,970 crore. Call option for the Gurgugram property lapsed.
The REIT has 6.7 million sq ft ROFO properties, including prime office and retail properties, bought from Hiranandani family in Powai, Equinox Business Park bought from Essar group, units in Godrej BKC bought in an auction and the Waterstone property in Mumbai.
ROFO means the sponsor-owned assets have to be offered to the REIT first and if REIT shareholders do not approve, they will be sold to a third party.
Brookfield listed the REIT in February 2021 and raised `3,800 crore through a public issue.
Also read: Now banks can check the probability of an MSME turning NPA. Here’s how
Sponsors of other REITs are also selling their properties to listed REITs.
In 2020, Embassy group and Blackstone, sponsors of Embassy REIT, sold a commercial property in Bengaluru to the REIT for $ 1.3 billion..
Blackstone, which floated and listed REITs with its partners, has been offloading its stakes in the listed REITs.
Earlier this year, Blackstone sold its entire 9.2% stake in Mindspace REIT to Abu Dhabi Investment Authority (ADIA) for $235 million, reports said.
In September this year, Blackstone raised $325 million by selling 7.7 crore shares/units in Embassy Office Parks REIT to institutional investors through block deals at `345 per share.
GIC has been one of the biggest investors in Indian real estate. It has floated a JV with DLF for residential properties, JVs with mall developer Phoenix Mills and a warehousing JV with ESR.
