RMZ plans to double office portfolio in five years via acquisitions, JDs

The Bengaluru-based asset owner plans acquisitions and joint developments to expand beyond 40 million sq ft, backed by a strong pipeline, near-zero vacancy and fresh capital raising plans

Bengaluru-based alternative assets owner RMZ is aiming to double its office portfolio, which currently spans 21 million square feet (msf), in the next five years through a combination of acquisitions and greenfield joint developments (JDs).

 

“If a relevant opportunity comes up, we are more than happy to buy or do JDs and take up large projects. We are looking at doing larger projects that will cater to the overall growth factors. Most of these projects will not be base-case information technology (IT) parks. We will be bringing in a lot of mixed-use elements like hospitality and retail for more inclusive developments,” said Thirumal Govindraj, chief executive officer, RMZ Office and RMZ NXT.

 

RMZ has 12 msf of office space under construction across the top six cities in India, while its acquisition pipeline includes office projects spanning 15-17 msf. The company is targeting a growth rate of 20-30 per cent year-on-year. Vacancy across RMZ’s office portfolio is merely 0.01 per cent.

 

Considering planned developments and expansion plans, the company is in the process of raising capital. “We are in the process of raising capital, and we have our own available in-house capital of around $1 billion (approximately over ₹9,000 crore) as well,” Govindraj told Business Standard. 

Govindraj stated that cap rates for acquisitions are underwritten at around 7.5–8 per cent and could go below 7.5 per cent over the next four to five years.

 

RMZ recently entered an agreement with Signature Global to develop a mixed-use project comprising office buildings, hotels, and retail spaces on the Southern Peripheral Road in Gurugram. Under the agreement, Signature Global and RMZ will form a 50:50 joint venture, with RMZ committing an investment of ₹1,283 crore to acquire a 50 per cent equity stake in the project.

 

The company has previously tied up with CPPIB and Mitsui Fudosan for different projects. “We may grow with them or grow with newer partners, but the calibre of our investors will be similar,” Govindraj said.

 

On the logistics and industrial front, RMZ NXT aims to achieve a portfolio of 4-5 msf over the next two years across the top six cities in the country. “We have just got around 300,000-400,000 square feet of portfolio ready and it is going live in the next couple of months,” Govindraj said.

 

The company aims to create more multi-modal industrial and logistics hubs. It is in talks with governments and different authorities to create large-scale infrastructure over the longer term. “In logistics, current yields and rentals are still pretty low compared to the land values today. Land values have almost doubled if not tripled in the last couple of years but rentals have not moved up. The sector is getting organised and quality is improving,” Govindraj added.