Canada Pension Plan Investment Board (CPPIB) will invest Rs 2,600 crore to acquire a 49 per cent stake in TATA Realty and Infrastructure's two premium commercial office projects at Chennai and Gurugram, and their joint venture plans to further invest Rs 2,000 crore to buy land and completed assets for future growth.
In an interview with PTI, TATA Realty and Infrastructure MD and CEO Sanjay Dutt said the company has formed a partnership with CPPIB to develop and own commercial real estate assets as it remains bullish about the future potential of the office market across major Indian cities.
"We want to grow our commercial real estate business. Our target is that we will develop 45 million square feet area in the next 5-7 years," Dutt said.
The company already has a completed commercial portfolio of 7.5 million square feet while 14 million square feet is under various stages of design and development from its existing land bank.
"We want to invest at least Rs 2,000 crore to buy new land parcels. For this, we have formed a partnership with Canada Pension Plan Investment Board," Dutt said.
Property consultant Anarock facilitated the deal.
Under the partnership, CPPIB will acquire 49 per cent stake in two projects -- Intellion Park Chennai with 4.6 million square feet of gross leasable area, and Intellion Edge Gurugram having 1.8 million square feet of gross leasable area. The Chennai project is fully complete while the Gurugram project is 50 per cent complete.
"The total aggregate equity value of the joint venture will be Rs 5,300 crore (Canadian dollar 866 million)," he said, adding that CPPIB would invest Rs 2,600 crore (Canadian dollar 438 million) as equity.
Tata Realty will hold the remaining 51 per cent stake.
Dutt said the total gross asset value of these two projects will be Rs 8,000 crore (Canadian dollar 1.3 billion) after fully completed.
The joint venture partners intend to further allocate capital investment of up to Rs 2,000 crore (Canadian dollar 333 million) for future acquisitions of land parcels and completed assets.
"If there are good opportunities, we may allocate more funds," Dutt said.
The joint venture will target stabilized and developed assets, aiming to reach over Rs 5,000 crore (Canadian dollar 800 million) in assets under management.
“We believe in building centers of excellence that provide tenants with high-quality spaces that enable businesses to grow and evolve," Dutt said.
With investments from CPPIB, he said the vision of this joint venture is to provide world-class sustainable office space solutions to a diverse set of businesses.
This will enable the opening up of new business opportunities for the company and accelerate its current growth, Dutt said.
Hari Krishna V, Managing Director, Head of Real Estate India, CPP Investments, said, “This new relationship with TATA Realty and Infrastructure provides an excellent avenue to explore opportunities in the fast-growing commercial real estate sector."
TATA Realty Infrastructure is a 100 per cent subsidiary of Tata Sons. It has an extensive portfolio of over 50 projects across 15 cities.
Tata is one of India's largest conglomerates, with annual revenue of over $100 billion, and 107 operating companies in seven business sectors, employing over 750,000 people worldwide.
Canada Pension Plan Investment Board (CPP Investments) is a professional investment management organization that manages the fund in the best interest of the more than 21 million contributors and beneficiaries of the Canada Pension Plan.
In order to build diversified portfolios of assets, investments are made around the world in public equities, private equities, real estate, infrastructure, and fixed income.
On December 31, 2021, the Fund totaled the Canadian dollar 550.4 billion.