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05
November 2018
 |
IL&FS (The Total Investment & Insurance Solutions)
The
prominent corporate headquarters of Infrastructure Leasing & Financial
Services (IL&FS) one of the earliest to come up in the bustling financial
district of Bandra-Kurla in Mumbai, is on the block. Selling its headquarters
is one of minor options for cash-strapped IL&FS to raise funds, which has a
debt of Rs100,000 crore.
The
circular IL&FS headquarters has attracted the interest of two bidders at
least – private equity firm Blackstone group of the US and Canada-based
Brookfield Asset Management, one of the largest global real estate investment
firms. Both Blackstone and Brookfield are two of the largest foreign players in
the real estate business in India. It appears that Blackstone is willing to pay
Rs950 crore for the building. Sometime ago, when Hari Shankaran was the
managing director, IL&FS was demanding Rs1,200 crore for the property.
The
reason why IL&FS has demanded a much higher price is because all the
buildings in the Bandra-Kurla area now enjoy a higher floor space index –FSI,
the measure of how much floor space that can be constructed. However, this
extra FSI is only on paper. Due to proximity to the airport, it is unlikely
that buildings in BKC area will be able to utilise the increased FSI and go
much higher.
The
sale of IL&FS headquarters would be the first publicly visible action
marking the dismantling of a maddeningly complex and highly leveraged IL&FS
group. The group, comprising as many as 347 subsidiaries and associate
companies, has emerged as the new template of mis-governance of public funds
under the garb of public-private partnership and the personal enrichment of the
senior officials, many of whom were drawn from the ranks of the Indian
Administrative Service (IAS).
Brookfield
has been aggressive acquirer of marquee assets. In April this year, it bought
Equinox Business Parks, a prime commercial property also at BKC, for Rs2,400
crore from Essar group. The 10-acre business park comprises four towers, with a
leasable office space of about 1.25 million sq ft. Earlier in 2016, Brookfield
bought 4.5 million sq ft commercial properties from the Hiranandanis in Powai
area of Mumbai and 17 million sq ft of Unitech Corporate Parks in 2014.
Blackstone
is also quite active in India. According to reports, Embassy Office Parks, a
joint venture between Blackstone and Embassy group, is looking to float the
public issue of its real estate investment trust (REIT) early next year.
Embassy Office Parks holds a portfolio of 33 million square feet across Mumbai,
Pune, Bengaluru and Noida. About 24 million sqft of this portfolio is completed
and out of this around 95% is leased out.
Annual
rental income of the portfolio is over Rs2,000 crore. Blackstone Real Estate
has committed to $5.3 billion across 31 investments in India. Of this, $3.9
billion is in office assets; it has invested in more than 100 million sqft of
office space, says a report from Business Standard.
IL&FS
has rented out several floors of its headquarters. It advertises itself to
prospective clients as one of the biggest commercial buildings in BKC and is
the most noticeable upon entering G Block, 300 metres away from BKC food court.
Standing 10 floors high, it has a floorplate measuring 40,000 square feet.The Total Investment & Insurance
Solutions
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