Brookfield India REIT Acquires 7.7 Million Sq Ft Bengaluru Office Campus for Rs 13,125 Cr
Brookfield India Real Estate Trust has entered into binding agreements to acquire a 100% interest in Ecoworld, a 7.7 million sq ft Grade A office campus located on Outer Ring Road in Bengaluru, for Rs 13,125 crore. This acquisition marks Brookfield's entry into one of India’s strongest office markets, expanding the size of their REIT by over 30% and positioning them as a pan-India platform.
The board of the manager has proposed to fund the transaction through Rs 3,500 crore of new debt issuance, Rs 1,000 crore of cash proceeds from the preferential issue concluded in the second quarter, and a new equity issuance of Rs 2,500 crore. Alok Aggarwal, CEO & MD of Brookfield India Real Estate Trust, stated, “This acquisition will mark our entry into one of India’s strongest office markets, expanding the size of our REIT by over 30% and positioning us as a pan-India platform. Our embedded growth prospects remain strong with continued leasing momentum, making us well-positioned to deliver value to our unitholders.”
The asset is leased to several global capability centers and corporates, including Honeywell, Morgan Stanley, State Street, Standard Chartered, Shell, KPMG, Deloitte, and Cadence. The property is currently part of the Brookfield Properties portfolio. It was originally developed by RMZ Corp, which in 2020 sold its assets, including part of Ecoworld, to Brookfield Asset Management.
The transaction is being undertaken at a 6.5% discount to Gross Asset Value (GAV) and is expected to result in 1.7% pro-forma Net Asset Value (NAV) accretion and 3% pro-forma distribution per unit (DPU) accretion, as the REIT noted in a regulatory filing. Post-acquisition, Brookfield India REIT’s operating area will increase by 31%, and Gross Asset Value by 34%. The share of global capability centers in tenancy will rise to 45%, while the top 10 tenant concentration will reduce to 30%. The share of dividends in the REIT’s distribution profile is projected to rise from around 16% to 30% in the near term.
During the quarter ended September, Brookfield India REIT’s gross leasing stood at 592,000 sq ft, with an average re-leasing spread of 21%, taking its gross leasing for the first half of the year to 1.2 million sq ft. Committed occupancy crossed 90%, rising over 10% since the Special Economic Zone (SEZ) policy reforms. Global capability centers accounted for 46% of total gross leasing during the quarter. Aggarwal added, “We delivered another strong quarter, achieving 90% occupancy due to strong demand from global capability centers and leading corporates for our high-quality assets.”
Income from operating lease rentals grew 12% from a year ago to Rs 475.7 crore, while Net operating income (NOI) rose 13% to Rs 509.4 crore. The REIT has announced distributions of Rs 5.25 per unit, totaling Rs 336 crore, up 14% from a year ago. For the first half of the financial year, operating lease rentals increased 10% on-year to Rs 934 crore and NOI rose 13% to Rs 1,008 crore. Distributions for the half-year totaled Rs 655.1 crore, equivalent to Rs 10.50 per unit.
