RMZ to float REIT by April’17

RMZ Corp, the Bengaluru-based property developer backed by Qatar Investment Authority (QIA), is looking to file a prospectus for a real estate investment trust (Reit) by April next year.

The company is looking to list its Reit by the third quarter of 2017, RMZ Corp chairman Raj Menda told media. “Preparation are at a preliminary stage and we are in the process of appointing bankers,” said Menda. US-based private equity giant Blackstone, with its partners – Bengaluru-based Embassy and Pune-based Panchshil – are also believed to have started preparation for forming a Reit, sources said. Menda said they prefer a private Reit structure, as allowed in the case of the infrastructure investment trust (InvIT).

“Both us and QIA do not want to sell out. However, when we go out to buy an asset, we can sell our Reit units and create liquidity,” he said. Besides, he said, in the case of a private Reit, they can raise large chunks of funds from a limited number of investors such as pension funds, unlike raising small chunks from large number of retail investors.

“Even if we do not get a private Reit, we will go ahead with Reit plans,” he said. Menda said RMZ is also planning to set up a new platform with QIA after their first platform, which bought commercial properties in Mumbai, NCR and Chennai. “Under the first platform, we have invested 80 per cent of the corpus in income-producing assets and 20 per cent in under-construction projects. It fits perfectly with the Reit norms,” he said.

If they need to acquire new properties and continue the business, they need to have a new platform, he said. The new platform will be an equal venture and will have a corpus of Rs 1,300 crore to Rs 1,500 crore, he said. In the earlier platform, RMZ held 54 per cent stake, while QIA and Baring Private Equity held the rest.

RMZ also plans to grow its office portfolio five times in the next five years through development, acquisition and aggregation of office properties. The company owns about 17 million square feet office spaces in the country and wants to take this to 20 million sq ft by 2017 and 80 million sq ft by 2021. In the first phase up to 2017, it will develop and acquire properties and after that it will also aggregate properties where it will offload stake in the holding company, Menda had said. “After 20 million sq ft, we can list in Singapore or India,” Menda said.

If one goes by RMZ’s plans, it could overtake the largest office developers such as DLF and Embassy by 2021. DLF, the country’s largest property developer, has 27 million sq ft of office assets and wants to develop five million sq ft in the next couple of years. Embassy group has about 30 million sq ft of offices and plans to add 12 million sq ft in the next three years. Embassy also has a joint venture with Blackstone.

“In the first phase, we want a equal mix of development and acquisition of office properties,” Arshdeep Sethi, managing director- development, RMZ said, adding the company plans to invest $500 million to develop office properties in the next 12 to 18 months. RMZ has $200 million of lease revenues ever year and expects to grow at a compounded annual growth rate of 30 to 35 per cent this year, Sethi said.

RMZ had earlier bought 800,000 sq ft information technology park in Gurgaon from developer BPTP for about $150 million. The deal, which is a mix of debt and equity, marked the Bengaluru-based company’s maiden foray into National Capital Region (NCR). RMZ also bought Essar’s business park, Equinox, in Mumbai for about $360 million.

“Besides Bengaluru, Chennai and Hyderabad, we want to develop and acquire properties in Mumbai and NCR. We are evaluating deals in Gurgaon in NCR, and BKC and Western Express Highway in Mumbai,” Sethi said.

In 2013, QIA invested $300 million in a Special Purpose Vehicle (SPV) of RMZ in one of the largest investment deals that year. Baring Private Equity Partners also has a 28 per cent stake in the SPV.

BETTING ON OFFICE SPACE

RMZ owns 17 million sq ft office spaces in the country; wants to take this to 20 mn sq ft by 2017 and 80 mn sq ft by 2021

In the first phase up to 2017, it will develop and acquire properties; also plans to aggregate properties where it will offload stake in the holding firm

RMZ earlier bought 800,000 sq ft IT Park in Gurgaon BPTP for about $150 mn. It also bought Essar’s business park, Equinox, in Mumbai for $360 mn

Credits Business Standard

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