Varde Partners funds $155 million for two office developments in Hyderabad – ET RealEstate

Global alternative investment Varde Partners has provided senior construction financing on two pre-leased office assets of the Phoenix Group in the Gachibowli financial district of Hyderabad, India.

The $155 million or Rs 1,137 crore facility will be used to refinance and fund to completion over 2.5 million sq ft across the two grade A developments owned by the developer, Varde Partners said in a release.

ET broke the story regarding this transaction on March 22.

Out of the total development, over 1.5 million sq ft has been pre-leased to two multinational companies, reflecting the quality and location of the assets. Construction of both projects is well-advanced, with sub-structure development complete and super-structure phases underway.

Varde believes that India’s real estate market is experiencing a significant imbalance in the supply and demand of capital, leading to many businesses with robust balance sheets seeking alternative sources of capital.

“We see significant opportunity across the Indian office market for both the financing and purchase of assets, in a market that offers potential strong cash-flow visibility, multinational tenants and strong absorption,” said Tim Mooney, Partner and Global Head of Real Estate at Varde Partners. “India is a dramatic example, but emblematic of what we’re seeing across the Asia Pacific region, and across the globe. We believe that a real estate cycle is upon us and while not nearly as pronounced as the cycle brought on by the global financial crisis, the opportunity set is significant and growing.”

Varde Partners is a leading global alternative investment firm with roots in credit and distressed. Founded in 1993, Varde Partners has invested $75 billion since inception and manages more than $14 billion across corporate and traded credit, real estate and mortgages, private equity and direct lending.

Indian real estate sector is expected to continue to witness increased interest from global institutional investors and higher allocation of long-term capital from them given the limited growth opportunities in other developing markets.



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GIC to buy 1.1 million sq ft Phoenix Group’s IT SEZ in Hyderabad for Rs 1,050 crore – ET RealEstate

Singapore sovereign wealth fund GIC has entered into an agreement to buy an Information Technology-Special Economic Zone (IT-SEZ) spread over 1.1 million sq ft in Hyderabad’s Gachibowli locality from the Phoenix Group for Rs 1,050 crore, persons with direct knowledge of the development said.

The entire development, Phoenix Aquilla, has two towers spread over 1.8 million sq ft and the first tower with 7 lakh sq ft has already been completed and leased. Both the towers situated next to Amazon’s operational campus are separate and independent parks.

The second block with 1.1 million sq ft space is currently under construction and is expected to be completed in the next 15 months.

Last year, in one of the single largest leasing transactions in the country, this entire IT park was pre-leased to American IT major Micron Technologies.

The deal with GIC is a forward purchase agreement as the project will be handed over by the Phoenix Group after completing the entire construction and execution.

GIC has paid part of the consideration amount upfront and balance will be transferred after the project’s handover to them.

ET’s separate email queries to GIC and the Phoenix Group remained unanswered until the time of going to press. Transaction advisor CBRE South Asia declined comment for the story.

Earlier this month, global alternative investment advisor Varde Partners invested over Rs 1,150 crore in the Phoenix Group’s two under-construction IT parks.

Prior to inducting GIC and Varde Partners, the developer entered into alliances with global entities such as CapitaLand, Xander, Lake Shore for its other projects.

In February, Ascendas India Trust entered into an agreement with the Phoenix Group to acquire an IT SEZ project for Rs 506 crore. This project, an IT SEZ, aVance 6 at HITEC City in Hyderabad, is spread over 6.3 lakh sq ft and around 98.3% of the space here is leased to Amazon Development Center.

In 2019 Abu Dhabi Investment Authority (ADIA)-backed Lake Shore India Advisory bought a majority stake in a retail mall project in Hyderabad from Phoenix Group for Rs 1,000 crore, inclusive of construction funding.

In 2018, Xander Investment Management, the private equity real estate arm of global investment firm, The Xander Group, signed a Rs 2,550 crore primary investment with the Hyderabad-based developer for development and acquisition of 4.5 million sq ft office space in the city.

Notwithstanding the Covid19-induced economic shock, global institutional investors’ appetite for Indian real estate has continued to grow as against the earlier expectation of a decline in their interest due to a bruised economy and challenges like the Work-from-Home model.

Indian real estate sector is expected to continue to witness increased interest and higher allocation of long-term capital from them given the limited growth opportunities in other developing markets.

A likely repair of the bruised economy, improving trade relations, policy support and progress on the vaccination front are the key factors expected to drive the sentiment henceforth.

Institutional investment in the Indian real estate staged a smart recovery during the quarter ended December with $3.5 billion investments. As a result, the year 2020 closed with $5 billion investments, equivalent to 93% of 2019 transactions, despite a sudden halt brought on by the pandemic.



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Varde Partners invests Rs 1,150 crore in Phoenix Group’s two office projects – ET RealEstate

Global alternative investment advisor Varde Partners has invested over Rs 1,150 crore in Hyderabad-based Phoenix Group’s two under-construction information technology special economic zone (IT-SEZ) projects in Gachibowli locality of the southern city, said persons with direct knowledge of the development.

Both the projects, with a total 3 million sq ft development, are located in Gachibowli financial district and are situated within a half a kilometre radius. The projects—Phoenix Aquilla and Phoenix Centaurus—are 50% completed and 12-18 months away from completion.

Phoenix Centaurus is a tower spread over 2 million sq ft across 17 large office floors adjacent to Microsoft’s operational campus in the city, while Phoenix Aquilla will have a total 1 million sq ft development next to Amazon’s operational campus.

“The global investment flowing into these under development SEZ projects indicates the resilience and strong confidence shown by international investors in Indian office market,” said one of the persons mentioned above.

Prior to inducting Varde Partners, the Phoenix Group has entered into partnership with global entities such as CapitaLand, Xander and Lake Shore for its other projects.

The total development of 3 million sq ft in both these IT parks is pre-committed to tenants like ZF Technologies and Micron Technologies.

ET’s email query to Phoenix Group remained unanswered until the time of going to press. Varde Partners and transaction advisor CBRE South Asia declined to comment.

In February, Ascendas India Trust entered into an agreement with the Phoenix Group to acquire an IT SEZ project for Rs 506 crore. This project, aVance 6 at HITEC City in Hyderabad, is spread over 630,000 sq ft and around 98.3% of the space here is leased to Amazon Development Center.

Abu Dhabi Investment Authority (ADIA)-backed Lake Shore India Advisory had in 2019 bought a majority stake in a retail mall project in Hyderabad from Phoenix Group for around Rs 1,000 crore, inclusive of construction funding.

In 2018, Xander Investment Management, the private equity real estate arm of global investment firm The Xander Group, had signed a Rs 2,550 crore primary investment with the Hyderabad-based developer for development and acquisition of 4.5 million sq ft office space in the city.

Indian real estate sector is expected to continue to witness increased interest from global institutional investors and higher allocation of long-term capital from them given the limited growth opportunities in other developing markets.

Two major deals in 2020—the Blackstone Group taking over of 21 million sq ft of completed and under-construction office, retail and hospitality assets from Prestige Estates for around $1.2 billion and the Brookfield Group picking up RMZ Corp’s 12.5 million sq ft office and co-working assets for $2 billion—indicate the continued interest in India and office properties that account for a major share of the portfolio deals.

Institutional investment in the Indian real estate staged a smart recovery during the quarter ended December with $3.5 billion investments. As a result, the year 2020 closed with $5 billion investments, equivalent to 93% of 2019 transactions, despite a sudden halt brought on by the pandemic.



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Varde Partners to acquire two commercial assets in NCR at over Rs 1,000 crore – ET RealEstate

NEW DELHI: US-based Varde Partners is in talks with New Vernon Capital to acquire two commercial buildings in Gurugram and Noida, three persons with direct knowledge of the deal said.

The deal is expected to be worth more than Rs 1,000 crore, with the complex in Gurugram’s Udyog Vihar costing Rs 600-700 crore.

The buildings together have about one million square feet of space, with over 90% of it occupied.

“New Vernon Capital is looking to exit from both these properties,” said one person familiar with the matter.

According to a report by property consultant JLL, India’s real estate market attracted $235 million in capital in the third quarter of 2020, growing by 52% quarter-on-quarter.

India’s real estate sector is expected to draw $4.8 billion of capital this year, representing an 8% decline from 2019’s total transaction volume of $5.3 billion.

New Vernon Capital did not respond to text messages and email.

“We will decline to comment on the specific deal, but I can confirm that Varde remains active in the Indian real estate market,” a spokesperson for the company said.

Varde opened an office in Mumbai in 2018 and has invested over $1 billion so far in India.

It recently acquired office building Lodha Excelus, in New Cuffe Parade (Mumbai) from the Lodha group.

“Every transaction for income producing assets at this time will set a new benchmark because it is a reflection of the evolving maturity of the commercial real estate market. There is a dearth of good income producing assets in north India, in comparison with the south and west,” said Anckur Srivasttava, chairman of real estate advisory firm GenReal Property Advisers.

According to JLL, investors are most attracted to the country’s office sector, with interest remaining strong throughout the Covid-19 pandemic and the partial relaxation of the lockdown.

Concurrently, global investors actively sought asset portfolio opportunities, with two landmark portfolio transactions amounting to a total of $3.6 billion in investment value likely to be concluded in the ongoing fourth quarter.

The review of investments in the first nine months of 2020 reveals that out of the $1.2 billion investments, Bengaluru, Chennai and Mumbai together accounted for 71% share.

Bengaluru led the pack with 33% share of real estate investments.



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