Blackstone, along with southern developer Salarpuria Sattva, is set to acquire Coffee Day founder V G Siddhartha’s real estate venture Tanglin Developments, which owns a technology park in Bengaluru, for about Rs 2,800 crore, according to people familiar with the matter.
The tech park, Global Village, is a 4-million-sqft tenanted office space located on a 120-acre campus. It counts Accenture and Mphasis among its tenants, besides having the headquarters of embattled IT company Mindtree.
Coffee baron Siddhartha, who sold his 20.4% stake in Mindtree to L&T last week, is selling the tech park Global Village, located off Mysore Road, to pare his ballooning debt. TOI first reported on the deal talks in its January 24 edition.
The deal, which is likely to be signed as early as next week, will see the private equity giant own about 80% of the special purpose vehicle (SPV), leaving Salarpuria with the rest. The acquisition comes soon after Blackstone’s first real estate investment trust (REIT) was oversubscribed 2.6 times for a listing on April 3.
Blackstone has been the earliest and the largest international investor in India’s commercial real estate, especially business parks with tenanted office spaces, catering to the booming services industry in the fastest growing major economy.
Blackstone — directly and through multiple joint ventures — has built a portfolio of 108 million sqft rent-yielding office spaces, some of which are under development.
Global Village has a potential to add another 5-6 million sqft of office space as it is now using only 45 acres of the land parcel. It fetches average rentals of Rs 40-50 per sqft, lower than the bustling office corridor of the Outer Ring Road (ORR) due to its location. However, the acquirer of the park is expected to see a surge in rentals due to the upcoming metro rail connectivity.
Blackstone declined to comment, while Siddhartha could not be reached for immediate comments.
Notwithstanding lower rentals, Blackstone is interested in the park because of its potential as a large hub for back office clients.
Occupancy levels at the park was about 3.46 million sqft as of last fiscal with Mindtree and Accenture occupying over 2 million sqft. Tanglin, started by Siddhartha in 1995, had another smaller business park called Tech Bay in Mangaluru. It isn’t clear if this is part of the deal.
By selling Tanglin and his holding in Mindtree, Siddhartha hopes to unlock around Rs 5,500 crore to repay debt as well as to finance expansion plans of his diversified Coffee Day Enterprises.
Other global investors, including Singapore’s GIC, Brookfield and Xander had explored acquiring Global Village before Blackstone emerged as the preferred suitor.