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Blackstone Group puts three land assets for sale

People & Companies / Latest News


Oct 31 2017

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Madhurima Nandy, Live Mint

Global private equity firm Blackstone Group Lp has put three pieces of land for sale at an expected valuation of Rs1,000-1,100 crore, said three people familiar with the transaction.

Blackstone, one of the largest owners of commercial real estate in India, has named consulting firms EY and Knight Frank to market these land assets, two of which are located in Bengaluru and the third in Chennai.

The three land parcels in Chennai and Bengaluru are part of a larger pack of seven parcels that realty firm DLF Ltd had intended to develop into residential projects in Bengaluru, Chennai, Indore and Kochi. In 2007, DLF sold 49% stake in these projects to Merrill Lynch & Co. for Rs1,481 crore. At the peak of the credit crisis in 2008, Bank of America Corp. acquired Merrill Lynch.

In 2010, Blackstone entered into an agreement to manage Bank of America Merrill Lynch’s Asian real estate assets and to act as the new general partner for the Merrill Lynch Asian Real Estate Opportunity Fund. In the process, it also started managing BofA Merrill Lynch’s assets in India.

This March, DLF and Blackstone restructured their shareholding pattern in the joint venture involving these projects. For instance, the former’s subsidiary DLF Home Developers Ltd bought back shares in a couple of projects and sold equity and preference shares in the others to the Blackstone-managed entity.

Post the restructuring, Blackstone now wants to sell these land parcels completely and has formally initiated the sale process, said one of the three people mentioned above, who didn’t wish to be named.

“Of the three land parcels, Begur is being actively marketed to developers in Bengaluru and conversations have begun,” said a second person.

Spokespersons from Blackstone and EY declined to comment. Knight Frank didn’t respond to an email query.

Two years back, Blackstone had initiated discussions with Bengaluru-based Ozone Group to sell the Begur plot.

A letter of intent was also signed, but the deal didn’t progress, one of three people cited above said, requesting not to be named.

New York-based Blackstone has invested over $2.7 billion in real estate projects in India and has been in acquisition mode buying both office and shopping malls. Land transactions have been happening despite the real estate slowdown owing to a fall in land prices and rise of distressed assets. There are more sellers in the market today than buyers.

However, there are developers from Mumbai and Bengaluru, backed by institutional investors, who are actively scouting for land parcels, mostly to build commercial offices and industrial warehouses, but also distressed residential parcels at lower valuations.

“While some land deals are happening, most developers can’t afford to block capital today due to the liquidity crunch. Earlier, most developers were on the lookout to buy land for future development, today only a few developers who have specific requirements are buying land,” said Shashank Jain, partner, transaction services, PwC India.

SOURCE: Live Mint


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