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US-based private equity firm Blackstone is in the final leg of negotiations to buy a commercial property of Mumbai-based Carnival Group in Chandigarh.
The deal size will be around Rs 2,200 crore. The deal will be one of the largest commercial property deals this year after private equity (PE) firm Xander group acquired 4.6-million-square-feet (sq ft) Special Economic Zone of Shriram Properties and Sun Apollo, a PE fund manager.
The size of the commercial property of Carnival is about 1.8 million sq ft, including 1-million-sq-ft mall, a Hyatt Hotel, and some office space.
Carnival bought the property from L&T Realty, an arm of Larsen and Toubro in 2015 for Rs 1,785 crore.
"The property is a non-core asset for Carnival. Since it is not a property developer, it wants to exit the property with handsome gains," said a source in the know. If the deal happens at Rs 2,200 crore, Carnival would make 23 per cent returns from its investment.
When contacted, a spokesperson of Blackstone said, "As a matter of policy, Blackstone does not comment on media/market speculations."
A mail sent to Carnival group did not get any response.
Blackstone is the largest owner of office space in the country, with a portfolio of 70 million sq ft. It has invested over $3 billion in Indian properties since 2011. Two of its joint ventures, one with Embassy group in Bengaluru, and the second with Panchshil of Pune, are looking to float real estate investment trusts or Reits.
Early this year, it bought 15 per cent stake in the rental arm of K Raheja Corp for Rs 1,700 crore. It was also in the race to buy stake in DLF rental arm DLF Cybercity, which went to Singapore's GIC.
Blackstone has also steadily built its mall portfolio over the last year and a half. It currently has mall space of 3 million sq ft. Atul Ruia-led Phoenix Mills is the biggest mall owner, with a portfolio of six million sq ft.
In 2015, Blackstone acquired AlphaOne malls in Ahmedabad and Amritsar for Rs 800 crore. It has revamped and rebranded the malls since then.
Last year, Blackstone bought a 1-million-sq-ft mall in the Seawoods area in Mumbai from L&T Realty for Rs 1,400 crore. According to sources, its mall portfolio is valued at Rs 1,800 crore.
Recently, it also bought a 50 per cent stake in West End mall in Pune.
Ramesh Nair, country head at JLL, said that Blackstone has been acquiring Grade-A lease-earning office properties over the past few years and the strategy has augured well for them.
"This is in line with their Reit listings plan. A point to consider here is that the residential properties have substantially crossed their previous peak attained in 2007 compared to office properties that have not even crossed the previous peak. Once the situation turns, all quality office properties are to gain considerably," Nair said.