Prestige Estates Projects has concluded phase 1 of the proposed transaction with US private equity major Blackstone Group worth Rs 74,670 million, the real estate developer said in a regulatory statement on March 10.
According to the company filings, the enterprise value of the transaction which forms part of phase 1 is approximately Rs 74,670 million out of the total enterprise value of approximately Rs 91,600 Million as mentioned in the Initial Disclosure.
Phase 1 of the transaction includes sale of 12 assets/undertakings comprising of completed retail, office and hotel assets, the company said. Phase 2 of the transaction is expected to get completed by the end of next quarter.
Stake sale
The overall transaction comprising Phase 1 and Phase 2 includes 100% stake sale in six completed office projects (including a hotel) and 50% stake sale in four under-construction projects, and 85% stake sale in nine shopping malls, the company said.
Commenting on the development, Prestige Group Chairman Irfan Razack said the company believes that this transaction will further strengthen our foundation and help Prestige Group in gearing up for the next level of growth.
“This transaction will also aid us in building long-term strategic partnership with Blackstone Group and leverage the respective strengths of both to create value for the stakeholders. With our unparalleled execution track record, balanced portfolio across segments and geographies and deep management expertise, we are uniquely positioned to capture opportunities for growth and gain from the accelerated consolidation that is taking place in the real estate industry,” said Irfan Razack.
Irfan Razack also said the company has a strong development pipeline of about 43 mn sq ft office and retail portfolio in the key locations across the cities and in the next 4-5 years it is projected to yield rentals of over Rs 30,000 million per annum – growth close to 10x of our post deal rental portfolio of about Rs 3,000 million.
Capital recycling strategy
Expressing happiness over the transaction, Prestige Group Chief Executive Officer Venkat K Narayana said this marks the beginning of the next chapter of the company’s journey.
“This transaction is well aligned with our capital recycling strategy coupled with financial and strategic benefits. Financially, it provides us with the best opportunity to deleverage and further strengthen the balance sheet. Our consolidated net debt as on December 31, 2020, was Rs 84,645 million and current transaction value itself is Rs 74,670 million,” said Venkat K Narayana.
Strategically, this will aid in releasing significant management bandwidth to focus on new growth areas and increasing our market share across key cities and business segments. Proceeds from the transaction will be used to repay debt, for growth and for construction of on-going projects, he said.
Prestige Group, has diversified business model across residential, office, retail, and hospitality segments with operations in 12 key locations in India. The group has completed 249 award projects with developable area of 135 mn sq ft. It has 47 ongoing projects across segments, with total developable area of 59 mn sq ft. Further, it has 62 mn sq ft under planning and holds a land bank with potential developable area of over 27 mn sq ft.
The company has been graded CRISIL DA1 by CRISIL and also enjoys credit rating of ICRA A+. Blackstone is an institutional investor in India with assets estimated to be $50 billion at market value across various sectors in the country. Real estate accounts for nearly $20 billion of this market value across its 40 investments.
( The above story is based on Prestige Group BSE filing and inputs from www.moneycontrol.com )
