Hiranandani, Brookfield deal fully priced

Brookfield is expected to buy 4.5 mn sq ft of office and retail properties of Hiranandani for $1 billion or Rs 6,700 cr

The proposed deal between the Mumbai-based Hiranandani group of real estate developers and Brookfield Asset Management in in line with market rates, say investors aware of the details.

Brookfield is expected to buy 4.5 million sq ft of office and retail properties of Hiranandani for $1 billion or Rs 6,700 crore. Only Brookfield and GIC, the Singapore government's sovereign wealth fund, were in the final race. The latter withdrew, said a source.

“At Rs 15,000 per sq ft, the deal is in line with market rates. Even residential properties command that kind of value,” said an investor who did not want to be named.

Said Rubi Arya, vice-chairman of Milestone Capital, a Mumbai-based fund manager: “It looks like a fully priced deal. They would have built the assets over the years and they expect a fair value for it.” Global investors. she said, want a pie of commercial assets which can grow and are ready to pay for it. According to the investor quoted earlier, the Hiranandani family is looking to get an investor so that they can value the assets and divide the value among the brothers. A Hiranandani spokesperson declined to comment.

“There is a restructuring happening to convert the partnership between Niranjan and Surendra Hiranandani into a corporate firm. We are evaluating offers from investors and options to float a real estate investment trust and others but nothing is final,” said a source in the group, who did not want to be named

Realty companies such as the promoters of DLF and the Bengaluru-based Embassy Group are also looking to sell stake in office assets. DLF's promoters are looking to sell 40 per cent in their company owning office assets and expect to receive expressions of interest from buyers in the next 10 days. About 25 entities are in the race to buy the stake, expected to garner Rs 12,000 crore for the promoters.

Embassy plans to divest nearly a third of its stake to raise Rs 5,000 crore, to fund expansion of new projects in commercial real estate, hospitality and warehouses. Investors are also betting on growing rents in office properties across the country. Prime rentals in Bengaluru and Mumbai grew steadily over the past eight quarters and rose 4.9 per cent  and 2.9 per cent, respectively, during the first quarter of 2016, showed the Knight Frank Asia Pacific Prime Office Rental Index.