IL&FS Milestone Fund, the joint venture vehicle between Mumbai investment management firms IL&FS Investment Managers and Milestone Capital Advisors, has purchased a majority stake in a 1.8 million square foot development in the Vikhroli area of the city.
The vehicle purchased the stake in a deal which values the park, called 247Park, at 775 Crores (€136 million; $165 million).
Ved Prakash Arya, managing director and chief executive of Milestone Group, said the partners regarded the asset as a “premium commercial development”. He said: “The stable rental returns from such properties would be extremely attractive for its investors with reasonable yield expectations in the current volatile investment environment.”
Rajgopal Nogja, president of vendor HCC Real Estate, said that several “fund houses” had shown a “keen interest” in investing in the project. Local newspapers reported that Morgan Stanley and Blackstone had expressed an interest in the scheme.
Development of the park finished in March 2010. More than 85 percent of its 1.1 million square feet of leasable space has been taken.
IL&FS and Milestone have invested in India real estate together via two IL&FS Milestone Funds.
The first was used to invest in offices, warehouses, hostels, hospitals, IT and ITES projects and retail assets. According to Milestone’s website, the vehicle has made “eight quarterly yield distributions” so far “averaging at around 11 percent annualised yields” and a capital multiple of 1.23 times. The second of the vehicles is targeting assets already completed and rented. This vehicle is expected to invest more than half of its capital in warehouses but also in other commercial sectors.