Piramal-backed Indiareit Fund exits from Skylark's Bengaluru project

The deal is expected to yield an IRR (internal rate of return) of 18-19 per cent for Piramal.

Ajay Piramal-backed Piramal Fund Management's 'Indiareit Fund V' has exited its investment in Bengaluru-based developer Skylark Mansions for an undisclosed amount.

Piramal's Indiareit Fund V had invested Rs 36 crore in Skylark Mansion in 2014 for a luxury residential project in Bengaluru, which has now been taken over by Shankaranarayana Constructions (SNC) to develop a premium commercial project.

The transaction, facilitated by property consultant JLL, included sale of a prime commercial land parcel on Richmond Road in Bengaluru's central business district to SNC.

"This deal marks Piramal's exit in the project. SNC has now taken over the project and plans to invest over Rs 100 crore to develop a world class office space on the land," JLL India Managing Director, Bengaluru Rahul Arora told PTI.

The deal is expected to yield an IRR (internal rate of return) of 18-19 per cent for Piramal, he added.

The development comes within five months of Piramal Fund Management seeking an extension from investors for exiting its investment made through this fund.

Indiareit Fund V, which was launched in 2013 with a primary tenure of six years (extendable by up to two additional one-year periods), had made 10 investments and has already exited completely from four of them and partial exit from one project.

Since the six-year tenure of the fund ended in July last year, Piramal had sought an extension of one year from August 1, 2019 to July 31, 2020 for exiting from its residual investments.

While seeking the extension, Piramal had noted that it had recommended Skylark to develop a commercial project with the existing FSI (floor space index), instead of a residential project, to ensure faster cash flow realisation.

Since Skylark was facing group-level liquidity issues, it was unable to raise construction finance for the commercial project.

"Considering the delays in project approvals, continued uncertainty in TDR (transferable development rights) regulations, group level cash flow stress and residual tenure of the Fund, we are now exploring to sell the project land," Piramal Fund Management had said in its note.

Arora further said that the central business district (CBD) of Bengaluru continues to be highly vibrant in terms of commercial potential.

"Commercial space absorption in the CBD as well as the broader Bengaluru market has scaled new records in the recent past. There has been a rise in investor interest in acquiring prime commercial land parcels and this development is significant," he added.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel