Milestone, IL&FS in record INR10.6bn sale to Blackstone

The two Mumbai-based private equity real estate firms have sold a commercial office property to Blackstone in a deal that represents the largest ever commercial property exit in India.  

Mumbai-based private equity real estate firms, Milestone Capital Advisors and IL&FS Investment Managers have sold a commercial office property acquired via a joint venture partnership to The Blackstone Group for INR 10.6 billion (€152 million; $166 million). The deal has been pegged to be the largest commercial real estate exit for a single asset by an Indian private equity real estate firm to date.

Blackstone, whose real estate business in India is led by Tuhin Parikh, will acquire a 100 percent stake in 247 Park, an over 1.1 million square foot, fully completed and leased office property located in a Mumbai suburb, in a transaction that has been negotiated over two years.   

The asset was jointly owned by Milestone Capital Advisors, with a 74 percent interest, and the Indian engineering and construction company called Hindustan Construction Company (HCC), which owned the remaining 26 percent. Milestone Capital Advisors had majorly acquired its interest in the property in 2010 via the IL&FS Milestone Fund II, a real estate fund launched as part of a joint venture agreement between the firm and the Mumbai based private equity fund management firm, IL&FS Investment Managers – a deal which reportedly valued the property then at INR 7.75 billion.

Milestone confirmed the sale but declined to divulge further details. However, PERE has learnt from an industry source that the firm has exited the property at a gross IRR of 30 percent and a multiple of 2.5x. The property is also believed to be generating an annual rental income of close to INR 1 billion.

Blackstone itself steered the second largest real estate exit in the country in November 2013, when it teamed up with a Pune-based developer Panchshil Realty to acquire Express Towers, an iconic commercial building in Mumbai, for close to INR 8.7 billion. Mumbai-based private equity real estate firm ICICI Ventures had exited its 49 percent interest in the property via the sale.

Last week, Milestone Capital Advisors announced another exit from an investment made in the Millennium Tower, a commercial property in Kolkata The asset, which was acquired via the IL&FS Milestone Fund I, was divested at an investment multiple of 1.6x.