Kotak Realty completes largest exit by RE Fund

Kotak India Real Estate Fund I on Monday announced the sale of Peepul Tree Properties Private Limited (Peepul Tree Properties), a wholly-owned undertaking, to Tata Realty Initiatives Fund 1 for an enterprise value of Rs 525 crore ($117 million).

Peepul Tree Properties owns an information technology park in the Mumbai suburb of Goregaon, which has been 96 per cent leased to marquee tenants such as Accenture, HP, BNP, Tata AIG, BOB Legal and General, Integron and Prana Studios.

On an initial equity investment of Rs 95 crore, Kotak India Real Estate Fund I has received over Rs 400 crore from the exit, including internal accruals, a press release issued here stated.

The exit has many firsts to its credit. In addition to being the largest real estate exit in the Indian market by a Fund, Peepul Tree Properties is the first office property to be divested by a property fund in India, and one of the first foreign direct investments in an income producing asset, the release said.

Kotak India Real Estate Fund I is the inaugural Rs 457-crore ($100 million) domestic fund of Kotak Realty Fund.

With this sale, Kotak Realty Fund will also become the first property fund in India to return the entire corpus of the fund back to its investors. The said Fund has other notable investments such as Lemon Tree Hotels, Pride Hotels, 3C Green Boulevard and Clover Golf community that remain to be exited, the release said.

Commenting on the sale, Kotak Realty Fund Director, V Hari Krishna, said, “This has been a highly successful investment for the fund, notably it was a control investment, which we have been able to lease, operate and exit profitably. A $117-million exit of an office property in India demonstrates that the market is getting deeper and signals the return of institutional capital.”

Kotak Realty Fund CEO S Sriniwasan, said, “Our investment in Peepul Tree Properties and subsequent exit is a classic example of our approach to real estate investing and fund management. By making these investment decisions, we have helped build quality assets in partnership with leading Indian developers and have created enduring value for our investors”.