Prestige Estates completes phase 1 of Blackstone deal; stock jumps 4%

The management said the company has a strong development pipeline of about 43 mnsft office and retail portfolio in the key locations across the cities

Shares of Prestige Estates Projects jumped 4 per cent and hit an intra-day high of Rs 302.50 on the BSE on Friday after the company said it has completed phase I of its Rs 9,160-crore deal with Blackstone Group at Rs 7,467 crore. The stock of the real-estate company is trading close to its 52-week high level of Rs 314.95, touched on February 18, 2021.

The deals comprises of sale of 21 million square feet (mnsft) of assets by Prestige Group to Blackstone. These include six completed office assets, four under construction offices, and nine retail malls. Phase 1 of the transaction includes sale of 12 assets comprising completed retail, office and hotel assets. Phase 2, meanwhile, is expected to get completed by the end of next quarter.

Post the deal, the company will be left with residential projects, some minor rental assets and net debt of Rs 1,000 crore.

"Strategically, this will aid in releasing significant management bandwidth to focus on new growth areas and increasing our market share across key cities and business segments. Proceeds from the transaction will be used to repay debt, for growth and for construction of on-going projects," Prestige Estates said.

The management also said the company has a strong development pipeline of about 43 mnsft office and retail portfolio in the key locations across the cities and in the next 4-5 years it is projected to yield rentals of over Rs 3,000 crore per annum - growth close to 10x of our post deal rental portfolio of about Rs 300 crore.

At 10:25 am, the stock was trading 2.5 per cent higher at Rs 298 on the BSE, as compared to a 0.67 per cent rise in the S&P BSE Sensex. A combined around 440,000 equity shares had changed hands on the counter on the NSE and BSE till the time of writing of this report.