TATA Realty & CPPIB strike C$866 million commercial realty JV

TATA Realty and Infrastructure Limited, a 100% subsidiary of Tata Sons and one of the leading real estate development companies in India, and the Canada Pension Plan Investment Board (CPP Investments), a professional investment management organization, announced on April 12 the formation of a new joint venture to construct and own commercial office space in India.

The joint venture's total equity worth will be INR 53 billion (C$8661 million), with CPP Investments contributing INR 26 billion (C$438 million), according to the joint press release issued by the two firms.

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 future potential of 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.

Property consultant Anarock facilitated the deal.

Canada Pension Plan Investment Board (CPPIB) will invest Rs 2,600 crore to acquire 49 per cent stake in TATA Realty and Infrastructure’s two premium commercial office projects at Chennai and Gurugram.

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 company already has 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.

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.

"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.

"If there are good opportunities, we may allocate more funds,” Dutt also said.

The joint venture will target stabilised and development assets, aiming to reach over Rs 5,000 crore (Canadian dollar 800 million) in assets under management.

"We believe in building centres 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.

Speaking on the joint venture, 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."

(With inputs from PTI)