Oberoi Realty in talks with Morgan Stanley, GIC for JV

Realty firm may hold majority stake in Rs 1k-cr venture; plans to build 2-3 malls

Mumbai-based Oberoi Realty is in separate talks with US-based investor Morgan Stanley and Singapore’s sovereign fund, GIC, to set up a joint venture (JV) for developing malls, said an executive.

The venture would have a corpus of Rs 1,000 crore and Oberoi is expected to hold about 75 per cent, the executive said. Adding that it could also initiate talks with Canada Pension Plan Investment Board, which has shown interest in buying into malls. JPMorgan has been appointed the banker to find investors for the JV, the executive said. Vikas Oberoi, chairman and managing director of Oberoi Realty, could not be had for comments. E-mails to Morgan Stanley did not elicit a response. A GIC spokesperson declined to comment.

Oberoi is planning to build malls in this city’s Worli and Borivali areas. It already has an operational mall at Goregaon here, which will come under the new JV. “The company has plans to build a luxury mall in Worli as part of its mixed-use project. There will be another mall on land bought from Tata Steel,” the executive said.

While Morgan Stanley has exited most of its Indian real estate investments, it has a stake in Oberoi Realty. “Morgan Stanley is looking to invest from one of its international funds,” said the executive. Morgan Stanley bought about 10 per cent stake (worth Rs 675 crore) in Oberoi Realty in 2007.

GIC has invested about $1 billion (Rs 6,600 crore) in Indian real estate over the past two years. It recently bought a 50 per cent stake in Viviana Mall at Thane for about Rs 350 crore. It also holds a stake in the Runwal group’s R City mall at Ghatkopar, another Mumbai locality.

Many global investors such as Blackstone and GIC have bought into retail assets in recent years. Early this year, US-based Blackstone bought a one million sq ft mall being developed by L&T Realty in the Seawoods area of Navi Mumbai, for Rs 1,400 crore. Late last year, it acquired two retail assets of Gurgaon-based developer Alpha G, in Amritsar and Ahmedabad, for around Rs 800 crore.

“Many global investors are looking to buy good mall properties. It will help them build portfolios in the country and help mall developers consolidate their projects,” said Susil Dungarwal, founder of Beyond Squarefeet Advisory, a mall management company.

TOP MALL DEALS

• Blackstone buys a 1-million sq ft mall from L&T Realty in Navi Mumbai for Rs 1,400 cr
   
• GIC buys 50% stake in Viviana Mall in Thane for Rs 350 cr
   
• DLF sells its mall to a subsidiary company for Rs 904 cr
   
• Carnival Group buys Elante Mall in Chandigarh for Rs 1,785 cr