Blackstone may buy Mumbai's BKC headquarters for approx Rs 14-15 bn

US-based PE fund Blackstone is in talks with cash-strapped IL&FS to buy the latter’s head office building in Bandra Kurla Complex in Mumbai, sources said. 

Though the talks are in preliminary stages, the 400,000-sq ft building could fetch anywhere between Rs 14 and 15 billion, given the rates in the area, sources said. 

Capital values are between Rs 35,000 and Rs 40,000 per sq ft in BKC. “The plan to meet their obligations and have an asset light model,” said sources. 

Blackstone refused to comment on the development. 

An IL&FS spokesperson said, "Several potential buyers have expressed interest for the IL&FS Financial Centre, and it will be premature to offer any specific comment.” 

IL&FS has been facing debt woes for some time. 

IL&FS recently defaulted on a Rs 10-billion debt from Small Industries Development Bank of India (Sibdi) and defaulted on inter-corporate deposits and commercial papers to the tune of about Rs 4.5 billion. 

On Monday, rating firm Icra junked the short-term and long-term borrowing programmes worth over Rs 120 billion by IL&FS Group and one of its arm, and removed the entire group entities from its rating watch with developing implications. 

Blackstone has been aggressively buying IT parks and office properties in the last couple of years. Blackstone has invested over $5 billion across 30 real estate investments, of which $3.7 billion is in office space.

It has built a portfolio of over 80 million square feet with its partners. 

Recently, Blackstone entered a deal with Indiabulls Real Estate to buy a commercial property in Chennai for Rs 8.5 billion. 

In March, Indiabulls entered a deal with Blackstone to sell 50 per cent stake in two commercial properties in Mumbai — Indiabulls Finance Centre and One Indiabulls Centre — to Blackstone for Rs 47.50 billion.

In June, Blackstone Group raised about $9.4 billion for two new funds — the largest-ever fund dedicated to real estate investments in Asia as well as its first private equity fund for the region. 

It formed joint ventures with Embassy group for office properties in South and Panchshil Realty for properties in western India. Blackstone also picked up 15 per cent stake in K Raheja Corp. 

Blackstone-Embassy JV is gearing up for its first real estate investment trust or REIT in the country. 

The committee, in its deliberations, came to two major conclusions. First, it said that the currency management function of the central bank doesn’t automatically require it to manage and regulate payment systems as well. 

Second, it stated that the RBI’s claim that there will be a problem in regulation and possible regulatory arbitrage if the payments space moves out of the ambit of the RBI appeared to be “without evidence”.