Beleaguered billionaire Vijay Mallya’s investment holding company UB Holdings is in talks with Blackstone and KKR to unlock value of its office spaces, including the iconic head office UB Tower, said banking sources briefed on the matter.
PE investor may acquire Mallya’s office real estate, part of the UB City development in the heart of Bangalore, through a structured equity deal for roughly Rs 650 crore.
UB Holdings is also the parent of the debt-laden kingfisher Airlines. UB Group CFO Ravi Nedungadi offered “no comments” in reply to a texted query. A group spokesperson quoting Mallya denied that UB Tower was for sale. He did not elaborate.
The discussions with the competing PE investors are centered around a sale and lease back model, with UB Holdings having the right to buyback after a fixed period. “So it may not be sale technically,” said one of the sources mentioned earlier.
UB City is a joint venture between Mallya’s UB Holdings and Prestige Developers, with 1.6 million sqft mixeduse development comprising of office spaces, luxury retail and hospitality. Mallya solely owns UB Tower, while the rest of the property is split between the two JV partners.
The 200,000 sqft luxury hotel, Oakwood Serviced Residences, is owned by Prestige. Mallya’s share of UB City is around 905,000 sqft, with UB Tower alone being 300,000 sqft.
UB Tower, which is 123 metres high and one of the tallest buildings in city as of date, houses all the UB Group companies corporate offices, which include United Breweries, United Sprits, Mangalore Chemicals and Fertilizers, and UB holdings. Some of the other big corporate names occupying the office space in UB City include 3M, Apple, Citibank, Ernst & Young, Kawasaki and Yahoo!
Blackstone declined to comment while queries to a senior KKR executive remained unanswered at the time of going to press.
“Mallya is offering a 13% return on rental incomes,” said a source privy to the ongoing developments, and added that rental monetization package which Mallya had struck with HDFC would not come in the way of the deal. “The rental monetization package brought only around Rs 100 to Rs 150 crore for Mallya, which can be paid off with the money got from the sale and lease back model he plans to do now,” said the source.
PE investors like Blackstone have been on the prowl to buy out rent-yielding office space assets. The risk investors, who have shied away from typical PE investments in broader realty market, find office space a safer bet. Blackstone clinched two IT park deals recently in Bangalore and Pune.
PE investor may acquire Mallya’s office real estate, part of the UB City development in the heart of Bangalore, through a structured equity deal for roughly Rs 650 crore.
UB Holdings is also the parent of the debt-laden kingfisher Airlines. UB Group CFO Ravi Nedungadi offered “no comments” in reply to a texted query. A group spokesperson quoting Mallya denied that UB Tower was for sale. He did not elaborate.
The discussions with the competing PE investors are centered around a sale and lease back model, with UB Holdings having the right to buyback after a fixed period. “So it may not be sale technically,” said one of the sources mentioned earlier.
UB City is a joint venture between Mallya’s UB Holdings and Prestige Developers, with 1.6 million sqft mixeduse development comprising of office spaces, luxury retail and hospitality. Mallya solely owns UB Tower, while the rest of the property is split between the two JV partners.
The 200,000 sqft luxury hotel, Oakwood Serviced Residences, is owned by Prestige. Mallya’s share of UB City is around 905,000 sqft, with UB Tower alone being 300,000 sqft.
UB Tower, which is 123 metres high and one of the tallest buildings in city as of date, houses all the UB Group companies corporate offices, which include United Breweries, United Sprits, Mangalore Chemicals and Fertilizers, and UB holdings. Some of the other big corporate names occupying the office space in UB City include 3M, Apple, Citibank, Ernst & Young, Kawasaki and Yahoo!
Blackstone declined to comment while queries to a senior KKR executive remained unanswered at the time of going to press.
“Mallya is offering a 13% return on rental incomes,” said a source privy to the ongoing developments, and added that rental monetization package which Mallya had struck with HDFC would not come in the way of the deal. “The rental monetization package brought only around Rs 100 to Rs 150 crore for Mallya, which can be paid off with the money got from the sale and lease back model he plans to do now,” said the source.
PE investors like Blackstone have been on the prowl to buy out rent-yielding office space assets. The risk investors, who have shied away from typical PE investments in broader realty market, find office space a safer bet. Blackstone clinched two IT park deals recently in Bangalore and Pune.
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