Edelweiss Alternatives, the alternative asset arm of the Edelweiss Group, has finalised a deal to acquire MFAR Developers’ 1.21-million-sq-ft information technology park in Bengaluru for over Rs 1,475 crore, said multiple persons with direct knowledge of the development.
This is the largest and first transaction for a complete buyout of an office tower so far this year. Edelweiss Alternatives is buying this asset through its rental fund, which is currently in the process of raising Rs 5,000 crore.
The 12-storey office tower, which is in north Bengaluru’s Hebbal locality along Bellary Road and Outer Ring Road (ORR), is an independent asset within an ecosystem of large integrated mixed-use development.
“The weighted average expiry of existing leases in the property is around six years. The documents for the outright transaction have already been signed and the deal is expected to be registered in the next few days,” said one of the persons mentioned above.
Lease rental at property currently hovers around Rs 100 per sq ft a month. It is nearly 100% leased and occupied by multinational and domestic companies with business presence across technology, banking, financial services & insurance, automobile, consulting and ITeS. It counts companies like Bayer and IQVIA among its key tenants.
“The fund sees an opportunity to enhance financial and operational effectiveness of the asset by using technology, obtaining necessary certifications, planning capital expenditures, and refining capital structuring,” said the second person mentioned above.
According to him, there is a potential opportunity to reposition the asset through a proposed capex, upgradation plan with an objective to fetch higher rentals.
ET’s email query to MFAR remained unanswered, while Edelweiss Alternatives and transaction advisors JLL India and Credberg declined to comment for the story.
Edelweiss Alternatives’ rental yield fund is raising its rental yield plus fund from both onshore and offshore investors and has received robust response so far.
The fund is planning to primarily target markets in southern India such as Bengaluru and Hyderabad, alongside major markets like Delhi-NCR and Mumbai, with plans to build a 10-million-sq-ft portfolio within three years.
This fund will seek out and invest in quality commercial office properties in six major metros in the country. It will look to offer attractive investment opportunities, as a pre-REITs strategy, to investors eyeing rental income and capital appreciation.
Net absorption in India’s top seven office markets breached the 40 million sq ft mark and stood at 41.97 million sq ft in 2023, showed recent JLL India data.
This not only marked a new post-COVID milestone but also positions it as the second highest annual absorption, trailing only the levels recorded in 2019.
Institutional investors are expressing strong confidence in the Indian office sector, buoyed by its promising growth prospects and resilient demand. This optimism has fuelled a surge in activity with leading global and domestic funds finalising major deals.
