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Real estate-focused alternative asset management firm Integrow Asset Management is planning to raise over Rs 1,500 crore through a commercial real estate fund to invest in India’s top six property markets. The category II alternate investment fund will be investing in pre-leased and income-producing assets across Mumbai, Pune, Hyderabad, Bengaluru, Chennai, and Delhi-National Capital Region.
The fund will allow Integrow Asset Management to build an investment portfolio worth over ₹4,000 crore including the leverage potential. It has recently received capital market regulator Sebi’s approvals for the fund and aims to raise the corpus by the end of this year.
The new commercial property fund will be led by Ashish Mundada, who was recently hired by the company. His over 20-years experience includes a significant stint at global investment major BlackRock’s New York office as director and co-founder of the private debt (infrastructure) platform.
“Commercial real estate is a natural hedge against inflation through rental escalations and property appreciation. The fund will be primarily focusing on entire buildings giving control over tenant mix, rent control and professional property maintenance. We are targeting top six Indian cities, covering over 95% of Grade A office stock,” Mundada, head of commercial real estate (investments), Integrow Asset Management, told ET.
The proposed fund, India Grade A Office Fund, will make Integrow Asset Management India’s only real estate-focused multi-fund institution that can build portfolios across residential and commercial property segments.
The firm has already raised a residential real estate fund worth ₹1,000 crore in June 2022 and has been investing through the same in housing projects across Mumbai, Pune, and other key cities.
This will be one of the few commercial alternative investment funds by any domestic institutions.
The company has also recently received approval and licence for its portfolio management services (PMS). This will also be utilised for co-investing in projects as it plans to build a portfolio worth Rs 500 crore for residential projects specially in self-redevelopment space and is also looking to acquire early-stage projects through purchase of inventory of apartments.
The new fund with the total tenure of seven years is expected to invest between Rs 300 crore and Rs 600 crore per asset and expects its gross yields to be around 20% factoring for the leverage. At property level, the fund expects to fetch an internal rate of returns (IRR) of 8%-8.5%.
Large global and domestic institutional investors, including Blackstone Group, Brookfield Asset Management, Singapore’s sovereign fund GIC, Canada Pension Plan Investment Board (CPPIB), Kotak Investment Advisors, Abu Dhabi Investment Authority and Qatar Investment Authority have already been investing aggressively in Indian real estate assets.
Commercial real estate is a key segment driving the funds inflow over the past few years as institutions are ramping up their investment portfolios.
India’s real estate sector attracted over Rs 38,480 crore or $5.15 billion of investments spread across 47 deals in 2022, showed data from JLL India. This translates into a 19% increase in investments despite an uncertain environment, a testimonial to the confidence in the country’s property sector. The average transaction size in 2022 at $105 million was also 46% higher than a year ago.
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