CPP Investments' Big JV With India's TATA Realty and Infrastructure
The Canada Pension Plan Investment Board (CPPIB) is betting on India’s office market for the third time in one year, with the North American giant this week announcing an INR 53 billion (US$696 million) joint venture with the property development arm of Tata Group, the country’s largest conglomerate.
The announcement marked CPPIB’s second office joint venture in India so far in 2022 after it unveiled an INR 26.5 billion venture with RMZ Corp last month following a similar cooperation in April 2021. The pension fund manager’s commitments come as institutional investors latch onto the returns available from renting business park space to tech and business outsourcing giants in an economy which is expected to grow by nearly 9 percent this year.
“This new relationship with Tata Realty and Infrastructure, one of India’s leading operators, provides an excellent avenue from which to explore opportunities in the fast-growing commercial real estate sector,” said CPPIB’s head of real estate for India Hari Krishna in a press statement on Tuesday. “It is an important step in expanding CPP Investments’ relationships with leaders in the market, to deliver solid long-term adjusted risk-adjusted returns to CPP contributors and beneficiaries.”
CPPIB’s latest expression of confidence in Indian offices comes after tenants leased 1.24 million square feet (10.8 million square metres) of grade A accommodation in the country during the first quarter, according to Knight Frank. That take-up represented a 25 percent increase over the same period a year earlier, despite the country battling the Omicron wave.
Anchored by Banks and Tech
CPPIB is taking a 49 percent stake in its latest India office venture, while Tata Realty and Infrastructure, which is wholly owned by Tata Group’s primary holding company, will retain 51 percent and act as asset manager.
Hari Krishna of CPPIB
The venture is seeded by a business park asset in the southeast India tech hub of Chennai and a three block complex in the national capital region, both developed by Tata. The seed portfolio has a combined asset value of INR 80 billion and spans 6.2 million square feet in total gross leasable area.
The biggest asset in the initial acquisition is the Intellion Park Chennai in Tamil Nadu state capital’s Ramanujan Intellion Park.
Located in an information technology special economic zone, the property comprises six grade A office towers measuring 4.6 million square feet in GLA, all of which are rated as LEED Platinum under the US Green Building Council system for sustainable buildings.
Anchor tenants in the complex include e-commerce titan Amazon, UK-based pharmaceutical firm AstraZeneca and American banking giant Citi.
Also part of the initial deal is the three-tower Intellion Edge Gurgaon development in Gurugram, southeast of New Delhi.
First opened in November 2019 with the third and last tower set to be completed this year, the 1.6 million square foot complex is home to New York-based professional services firm Genpact and Bengaluru-headquartered co-working space specialist Simpliwork, among other tenants.
Both properties are nearly 100 percent occupied, with a large portion of tenants coming from the banking and IT sectors.
More Assets on the Way
“With CPP Investments as a strategic long-term partner, the vision of this joint venture is to provide world-class sustainable office space solutions to a diverse set of businesses,” said Tata Realty managing director and chief executive Sanjay Dutt. “This will enable the opening up of new business opportunities for Tata Realty and Infrastructure, allowing us to accelerate our current growth.”
Sanjay Dutt of Tata
Beyond the investment in the initial properties, CPPIB and Tata Realty are planning to allot up to INR 20 billion to fund future acquisitions of both stabilized assets and development projects in target cities including Mumbai, Delhi, Pune, Bengaluru, Hyderabad and Chennai. In addition to the Chennai and Gurugram properties included in the seed portfolio, Tata Realty’s website lists additional Intellion office park assets in operation in Mumbai and Gurugram with the total portfolio spanning 20 million square feet.
Tata Realty said the new JV is in line with its goal to acquire and develop 10 million square feet of commercial space in the next three years and reach a 45-million square foot portfolio by 2027.
Foreign Funds in India
After taking on its first India office JV with RMZ one year ago, CPPIB is making its latest commitment as Indian office opportunities continue to draw the attention of some of the world’s largest institutional investors.
Just this week US fund manager Hines announced that it is taking on a Bengaluru office project alongside local builder DNR Group, with that 2 million square foot development expected to be completed by late 2026.
In a report issued last month, CBRE India said that after experiencing capital inflows of $5.5 billion in 2021, investment in India’s real estate market can be expected to grow by another 5 to 10 percent this year.
Kailash Babar of India's Economic Times also reports that CPP Investments and Tata Realty ink Rs 5,300-cr equity JV for commercial developments in India:
The Canada Pension Plan Investment Board (CPP Investments) and Tata Realty and Infrastructure Ltd (TRIL), have entered into a joint venture to develop and own commercial office space across India.
The joint investment platform will target stabilized and development assets, aiming to reach over Rs 13,000 crore in assets under management. The total aggregate equity value of the joint venture will be Rs 5,300 crore, with CPP Investments’ equity commitment of Rs 2,600 crore.
The joint investment platform will target stabilized and development assets, aiming to reach over Rs 13,000 crore in assets under management. The total aggregate equity value of the joint venture will be Rs 5,300 crore, with CPP Investments’ equity commitment of Rs 2,600 crore.
“This is the beginning of a very strong partnership…With CPP Investments as a strategic long-term partner, 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 Tata Realty and Infrastructure, allowing us to accelerate our current growth,” Sanjay Dutt, MD & CEO, Tata Realty and Infrastructure.
Tata Sons’ real estate development arm will seed the platform with two assets, Intellion Park Chennai and Intellion Edge Gurgaon, National Capital Region of Delhi, which are currently owned and managed by the developer. Gross asset value of these two assets is Rs 8,000 crore.
Intellion Edge has gross leasable area of 1.8 million sq ft, of which 50% is ready and operational. Intellion Park has a total gross leasable area of 4.6 million sq ft and is fully operational.
“This new relationship with Tata Realty & Infrastructure provides an excellent avenue from which to explore opportunities in the fast-growing commercial real estate sector. It is an important step in expanding CPP Investments’ relationships with leaders in the market, to deliver solid long-term adjusted risk-adjusted returns to CPP contributors and beneficiaries,” said Hari Krishna V, Managing Director, Head of Real Estate India, CPP Investments.
ET was first to break the story in June that CPP Investments and Tata Realty were in talks to set up this office asset development platform in India.
The joint venture will also pursue Grade A commercial developments in key gateway cities in India, with an equity allocation of Rs 2,000 crore. These developments are estimated to provide additional 12-14 million sq ft commercial assets worth Rs 5,000 crore to the joint platform.
According to Dutt, the company is already in talks to acquire land parcels in key cities including Mumbai, Delhi, Pune, Bangalore, Hyderabad, and Chennai that collectively contribute the majority of India’s total Grade A office space stock and demand.
Currently, Tata Realty already has 7.5 million sq ft ready and operational commercial assets apart from around 14 million sq ft under design and development. The company is looking to expand its portfolio of commercial projects to 45 million sq ft in the next few years until 2027.
In December, Tata Realty announced its plan to invest over Rs 5,000 crore to undertake the development of a 47.1-acre integrated commercial project, its largest ever such development, in Navi Mumbai’s Ghansoli locality. The company counts leading global institutional investor Actis as its key equity partner for this 7-million-sq-ft project.
Earlier this week, CPP Investments put out this press release on the joint venture with TATA Realty and Infrastructure Limited:
- The total aggregate equity value of the joint venture will be INR 53 billion (C$8661 million), with CPP Investments’ equity commitment at INR 26 billion (C$438 million).
- Joint venture will be seeded with two assets with a gross asset value of INR 80 billion (C$1.3 billion) alongside an intention to further allocate capital investment of up to INR 20 billion (C$333 million) for future acquisitions.
Mumbai, India (April 12, 2022): TATA Realty and Infrastructure Limited and Canada Pension Plan Investment Board (“CPP Investments”) today announced a new joint venture to develop and own commercial office space across India. The joint venture will target stabilized and development assets, aiming to reach over INR 50 billion (C$800 million) in assets under management.
The joint venture will be seeded with two assets, Intellion Park Chennai (GLA2 : 4.6 million square feet) and Intellion Edge Gurgaon, National Capital Region of Delhi (GLA: 1.8 million square feet), which are currently owned and managed by TATA Realty and Infrastructure Limited. Intellion Park Chennai, one of India’s leading office parks, is a LEED platinum rated asset occupied by leading domestic and international businesses.
The joint venture would also pursue Grade A commercial developments in key gateway cities in India, with an equity allocation of INR 20 billion (C$333 million). Cities under consideration include Mumbai, Delhi, Pune, Bengaluru, Hyderabad, and Chennai which collectively contribute the majority of India’s total Grade A office space stock and demand.
Sanjay Dutt, MD & CEO, TATA Realty and Infrastructure Limited, said, “TATA Realty and Infrastructure Limited believes in building centers of excellence that provide tenants with high-quality spaces that enable businesses to grow and evolve. With CPP Investments as a strategic long-term partner, the vision of this joint venture is to provide world-class sustainable office space solutions to a diverse set of businesses. This will enable the opening up of new business opportunities for TATA Realty and Infrastructure Limited, allowing us to accelerate our current growth.”
Hari Krishna V, Managing Director, Head of Real Estate India, CPP Investments, said, “This new relationship with TATA Realty and Infrastructure Limited, one of India’s leading operators, provides an excellent avenue from which to explore opportunities in the fast-growing commercial real estate sector. It is an important step in expanding CPP Investments’ relationships with leaders in the market, to deliver solid long-term adjusted risk-adjusted returns to CPP contributors and beneficiaries.”
1 C$ = INR 60.0
2 GLA: Gross leasable areaAbout TATA Realty and Infrastructure Limited
TATA Realty and Infrastructure Limited is a 100% subsidiary of Tata Sons and one of the leading real estate development companies in India with an extensive portfolio of over 50 projects across 15 cities. With an agenda of dispensing intelligent, collaborative, and dynamic projects, TATA Realty and Infrastructure Limited has developed ~16.8 mn. sq. ft. of commercial projects and has ~30 mn. sq. ft. of projects under development & planning.
After establishing its strong foothold in Chennai, Gurugram, and Mumbai, TATA Realty and Infrastructure Limited aims to add 10 mn. sq. ft. in the next 3 years and move towards its goal of having a portfolio of 45 million sq. ft. by 2027.
Keeping with the Tata philosophy of leadership in sectors of national economic significance, TATA Realty and Infrastructure Limited and Infrastructure Ltd was set up to identify the most promising opportunities for growth in the Indian real estate and infrastructure arena. TATA Realty and Infrastructure Limited is currently focused on long-term infrastructure projects of national significance, as well as mixed-use projects in the real estate sector. As is with all Tata companies, the selection of projects is a specialized process, with the eventual selection list scoring high not only on business objectives but also on the guiding Tata values and policies. Tata is one of India’s largest conglomerates, with annual revenue of over $100 billion, and 107 operating companies in seven business sectors, employing over 750,000 people worldwide.
For More Info: https://www.tatarealty.in : www.intellion.inAbout CPP Investments
Canada Pension Plan Investment Board (CPP Investments) is a professional investment management organization that manages the fund in the best interest of the more than 21 million contributors and beneficiaries of the Canada Pension Plan. In order to build diversified portfolios of assets, investments are made around the world in public equities, private equities, real estate, infrastructure, and fixed income. Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. On December 31, 2021, the Fund totaled C$550.4 billion. For more information, please visit www.cppinvestments.com or follow us on LinkedIn, Facebook, or Twitter.
CPP Investments is teaming up with TATA Realty and Infrastructure Limited (TRIL), a wholly owned subsidiary of Tata Sons, one of the leading real estate development companies in India, to develop world-class sustainable office space for international and domestic businesses operating in India.
The joint venture will target stabilized and development assets, aiming to reach over INR 50 billion (C$800 million) in assets under management and.is being seeded with two assets, Intellion Park Chennai (GLA2 : 4.6 million square feet) and Intellion Edge Gurgaon, National Capital Region of Delhi (GLA: 1.8 million square feet), which are currently owned and managed by TATA Realty and Infrastructure Limited. Intellion Park Chennai, one of India’s leading office parks, is a LEED platinum rated asset occupied by leading domestic and international businesses.
Interestingly, anchor tenants in the complex include e-commerce titan Amazon, UK-based pharmaceutical firm AstraZeneca and American banking giant Citi.
The joint venture will also pursue Grade A commercial developments in key gateway cities in India, with an equity allocation of INR 20 billion (C$333 million). Cities under consideration include Mumbai, Delhi, Pune, Bengaluru, Hyderabad, and Chennai which collectively contribute the majority of India’s total Grade A office space stock and demand.
Notice CPP Investments is taking a 49% stake in the joint venture while TRIL will retain a 51% stake and act as the asset manager.
When you're investing abroad, you need a strong partner, and in India, TRIL is as good as it gets.
TRIL is also getting a world-class, long-term strategic partner, one that will help it realize its goal to acquire and develop 10 million square feet of commercial space in the next three years and reach a 45-million square foot portfolio by 2027.
And unlike the US and Canada where the future of work and offices remains a bit of mystery, demand for top office space in India seems more stable despite the pandemic wreaking havoc there too.
What else? Earlier this week, I discussed how CPP Investments acted as the lead investor in VerSe Innovation's US$ 805 million latest funding round, bringing its total investment in the company to US$425 million. Ontario Teachers' Pension Plan also made a significant investment in that round.
Do you see the common theme? Investing in India's fast-growing technology companies, premiere office space catering to top international and domestic companies, and toll roads like the investment Trust (InvIT) of the National Highways Authority of India (NHAI).
CPP Investments, OTPP and other large Canadian pensions are investing in India's real estate and infrastructure (real assets) as well as innovative technology companies.
Why India? Because the country boasts favorable demographics and it is undergoing a massive digital transformation which is fueling a vibrant and growing middle class.
In short, India offers tremendous opportunities but you need to align yourself with the right strategic partners and make sure you have the right platforms and people in place to capitalize on those opportunities.
Lastly, in related news, today CPP Investments announced that Priti Singh has been promoted to Senior Managing Director and Global Head of Capital Markets & Factor Investing:
John Graham, President & CEO, Canada Pension Plan Investment Board (CPP Investments) announced today a change in senior executive leadership, effective May 2, 2022.
Priti Singh has been promoted to Senior Managing Director and Global Head of Capital Markets & Factor Investing. In this role, she will be responsible for leading the External Portfolio Management, Active Macro and Quantitative Strategies & Risk Premia groups. Singh takes over from Poul Winslow, who is retiring from this role at CPP Investments after 13 years with the organization.
“Priti’s deep investment expertise, well over a decade of enterprise knowledge and commitment to important cultural initiatives within CPP Investments ideally positions her to add value to the Senior Management Team. We look forward to her continued leadership as she builds on the success of our experienced capital markets team that continues to deliver strong performance for the Fund,” said John Graham, President & CEO, CPP Investments.
Singh joined CPP Investments in 2008 and was most recently Managing Director, Head of External Portfolio Management and Interim Head of Strategy & Operations. Prior to joining CPP Investments in 2008, Singh worked for over eight years in the financial services and telecommunication industries. Singh holds both a Master of Business Administration degree from the Rotman School of Management and a Master of Physics degree from the University of Waterloo.
“Poul leaves with our immense gratitude for his dedication, insights and strategic direction, all of which have greatly benefitted the Fund and our public markets teams over what has been a period of tremendous growth and expansion for the Fund. In the more than a decade that we’ve worked together, Poul has shown himself to be a great mentor, innovator and favoured partner – his influence will be missed, and we wish him all the best in his retirement,” Graham added.
I too wish Poul Winslow a happy retirement and want to congratulate Priti Singh for being promoted to this important role at the organization.
She's obviously earned this nomination through hard work and delivering results, and you can't help but notice she has a very similar background to John Graham (MBA and higher level science degree).
Moreover, with this nomination, three women of diverse cultural and ethnic backgrounds -- Deborah Orida, Suyi Kim and Priti Singh -- now head up very important investment portfolios at CPP Investments and they have further diversified the organization's senior management team.
Here, I will credit John Graham, he once told me he has plans to diversify his senior management team and he is following up on his commitment.
Alright, let me wrap it up there.
I wish everyone a nice long weekend. Happy Easter and Passover to those that are celebrating.
I want to thank all of you who take the time to contribute to this blog and support it financially using the options under my picture on the top left-hand side. Blogging daily comments at this level requires a lot of preparation and commitment, so I appreciate those who value the work that goes into these comments. Thank you!
Below, an interesting recent fireside chat on real estate in India featuring Madhurima Nandy, Senior Editor of Mint and Ankur Gupta, Managing Partner, Real Estate at Brookfield Asset Management.
This is a great discussion, take the time to watch it and gain valuable insights on India's real estate market and how it is adapting in a post-pandemic world.
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