After successfully raising and deploying its first commercial office fund PREF I, PropShare Capital, a SEBI-registered Category II AIF manager, announces the launch of PropShare Real Estate Fund II (PREF II), the second scheme under its existing Category II Alternative Investment Fund (AIF). PREF I has been fully deployed across four office assets in Bangalore and Mumbai which are 100% leased to Grade A tenants LG, Tata Finance and 24/7 AI.
PREF II will also focus exclusively on completed Class A income-generating commercial real estate leased to multinational and blue-chip tenants in the tech hubs of India. PREF II is targeting to raise Rs. 500 crores with a further Rs. 200 crore green shoe option.
The Indian office market is forecasted to perform strongly on the back of increased outsourcing in the aftermath of the recession in the West which is driving multinationals to open new or expand existing Global Capability Centres (GCCs) in India which offers up to c.7-8x lower costs1. Domestic technology companies are also expanding aggressively with most large companies now asking employees to return to office fuelling the demand for office space.
PropShare comes with a team that was instrumental in setting up, investing in and scaling the office assets portfolio at global real estate fund The Blackstone Group as the leading office investor in India. The investment team comes with a collective institutional real estate investment experience of over $3 billion of assets.
Commenting on the launch, Mr. Kunal Moktan, CEO and Co-founder, PropShare Capital, said, "Following-up on PREF I, we are excited to launch the second scheme under PropShare Real Estate Fund targeting income-generating office assets in India. The current high inflation and interest rate environment has increased yields on all asset classes including commercial real estate. Since yields are inversely proportional to asset prices, this has led to high quality Class A offices being available at distressed prices. Developers are under pressure as high interest-bearing debt used to purchase land or fund construction is putting severe pressure on cash flows, forcing them to raise capital by monetising assets. Given the softness in the investing environment and lack of capital providers, only the highest quality assets are currently tradable. This has opened a unique one-time window for opportunistic investors to acquire quality Class A assets at above-market yields."
The fund is targeted at institutional investors, HNIs, family offices, and select sophisticated domestic and NRI investors. The minimum investment is Rs. 1 crore in-line with AIF regulations. PropShare Capital's current investor base includes institutional investors, family offices, HNIs and ultra HNIs and senior and middle management of large tech, financial services and consultancy companies as well as founders of tech start-ups.
1Source: NASSCOM 2016 Strategic Review report FY16