In a significant development in the real estate sector, Edelweiss Alternatives, the alternative asset arm of the Edelweiss Group, has sealed a deal to purchase MFAR Developers’ sprawling 1.21-million-square-foot information technology park in Bengaluru for a staggering sum exceeding Rs 1,475 crore. Sources privy to the transaction have confirmed this noteworthy acquisition, marking it as the largest complete buyout of an office tower thus far this year.
This monumental acquisition is facilitated through Edelweiss Alternatives' rental fund, currently in the process of amassing a substantial corpus of Rs 5,000 crore. The transaction underscores the robust confidence in Bengaluru's commercial real estate market, which continues to attract significant investments despite global economic uncertainties.
Situated in the vibrant locality of Hebbal in north Bengaluru, along the Bellary Road and Outer Ring Road (ORR), the 12-storey office tower stands as an independent asset within a sprawling integrated mixed-use development. Boasting a weighted average lease expiry of approximately six years, the property is currently almost fully leased, with renowned multinational and domestic companies from diverse sectors such as technology, banking, financial services & insurance, automobile, consulting, and ITeS occupying its premises. Notable tenants include esteemed organizations like Bayer and IQVIA.
Sources close to the development reveal that the transaction documents have already been executed, with the formal registration expected to conclude in the coming days. The property commands a lease rental of approximately Rs 100 per square foot per month, underlining its attractiveness to tenants seeking prime office space in Bengaluru's thriving business landscape.
Commenting on the strategic acquisition, an insider from Edelweiss Alternatives emphasized the fund's vision to optimize the asset's financial and operational efficiency through technological interventions, certification procurement, meticulous capital expenditures, and capital structuring refinements. Additionally, there are plans to reposition the asset through proposed capital expenditure and upgradation strategies aimed at enhancing rental yields.
Despite email queries to MFAR remaining unanswered and Edelweiss Alternatives and transaction advisors JLL India and Credberg refraining from providing comments, industry experts anticipate a positive trajectory for the commercial real estate sector in India.
Edelweiss Alternatives' rental yield fund, targeting both onshore and offshore investors, has garnered substantial interest. With a focus on major markets such as Bengaluru, Hyderabad, Delhi-NCR, and Mumbai, the fund aims to build a robust portfolio encompassing 10 million square feet within the next three years.
The burgeoning interest in commercial office properties is further substantiated by recent data from JLL India, indicating a net absorption of 41.97 million square feet across India's top seven office markets in 2023. This surge not only signifies a remarkable post-COVID recovery milestone but also positions the sector for sustained growth, eliciting confidence from institutional investors eyeing rental income and capital appreciation opportunities
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