PE major squaring up to pick up stake in JW Marriott property in Bangalore

Property developed by Rahejas may attract valuation of Rs 900 cr

Global private equity majors are understood to be sizing up to bid for a stake in the recently launched hospitality property in Bangalore which is managed by J W Marriott Hotels & Resorts and developed by The Advantage Raheja Group. 

 

It is understood that private equity players are keen on this prime development, which is in the hub of commercial development in Bangalore on Vittal Mallya Road. Senior PE fund managers indicated to Business Standard that they are keen on a stake for this property, but they are not sure how the Advantage Raheja Group will take it forward. 

 

Aditya Raheja, Director, The Advantage Raheja Group told Business Standard that they are not looking at selling the property as it is shaping up quite admirably. "Yes, this project has been delayed, but we are excited with this project and we anticipate good revenues for us going forward," he said.  The Advantage Raheja Group had picked up this piece of land from UB Group for around Rs 40 crore and have so far invested around Rs 750 crore to build this landmark property on Vittal Mallya Road in Bangalore.  The hotel, which has a total of 297 keys, was recently launched during which only half of the rooms were ready. Raheja said that they will be soon completing the furnishing of entire property.  According to investment bankers in the know, the property will be valued at close to Rs 3 crore per key taking the enterprise valuation to close to Rs 900 crore. 

 

Prior to this property, The Advantage Raheja Group has projects at Mumbai across residential as well as hospitality segments including well-known development such as J W Marriott in Mumbai. 

 

This move by private equity players to make a bid for this property comes at a time when there is serious bidding going on to buy another hospitality project managed by Four Seasons in Bangalore for as much as $100 million. It is understood that there are three bidders for this property, which also houses uber-premium serviced residences. 

 

According to real estate consultancy firm Cushman & Wakefield, private equity investments into the real estate segment in India fell 46% to $276 million during the first half of 2013, but funds worth $2 billion are available to be deployed.