Deal between Kotak India Real Estate Fund I and Tata Realty Initiatives Fund 1 is the largest exit by a real estate fund 

Mumbai: Kotak India Real Estate Fund I has announced the sale of Peepul Tree Properties, a wholly-owned undertaking, to Tata Realty Initiatives Fund 1 for an enterprise value of Rs525 crore ($117 million).

Peepul Tree Properties owns an IT park in Goregaon, in suburban Mumbai, which is leased to marquee tenants such as Accenture, HP, BNP, Tata AIG, BOB Legal and General, Integron and Prana Studios.

On an initial equity investment of Rs95 crore, Kotak India Real Estate Fund I has received over Rs 400-crore from the exit including internal accruals, the company said in a statement, reports PTI.

The exit has scored many firsts. In addition to being the largest real estate exit in the Indian market by a fund, Peepul Tree Properties is the first office property to be divested by a property fund in the country and one of the first foreign direct investments in an income producing asset, the company stated.

Kotak India Real Estate Fund I is the inaugural Rs457 crore domestic fund ($100 million) of Kotak Realty Fund. With the sale, Kotak Realty Fund will also become the first property fund in India to return the entire corpus of the fund back to its investors. The Fund has other notable investments such as Lemon Tree Hotels, Pride Hotels, 3C Green Boulevard and Clover Golf community.  

Kotak Realty Fund director, V Hari Krishna, said, "This has been a highly successful investment for the Fund. It was a control investment, which we have been able to lease, operate and exit profitably. A $117 million exit of an office property in India demonstrates that the market is getting deeper and signals the return of institutional capital."

Kotak Realty Fund chief executive officer, S Sriniwasan, said, "Our investment in Peepul Tree Properties and subsequent exit is a classic example of our approach to real estate investing and fund management. By making these investment decisions, we have helped build quality assets in partnership with leading Indian developers and have created enduring value for our investors."

"We are actively pursuing exit opportunities in our first fund, even while we continue to deploy capital from our subsequent funds. We have so far contracted exits aggregating $177 million, underlining our credentials as one of India's leading property fund managers. We will continue to focus on scaling up the business further with new fund offerings."

Kotak Realty Fund, a division of Kotak Investment Advisors Ltd, was established in 2005 and is one of the country's first realty funds with an opportunistic investment strategy.

The core investment team includes S Sriniwasan and V Hari Krishna, the founding members, and Vikas Chimakurthy. Kotak Realty has aggregate funds under management/advisory of $700 million across three funds: Kotak India Real Estate Fund I, a Rs457 crore domestic fund; Kotak Alternate Opportunities India Fund, a Rs1,491 crore domestic fund; and Kotak India Realty Fund, an offshore fund of $265 million.