Axis Asset Management Company partners with Tishman Speyer to invest and develop commercial properties across key cities

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Axis Asset Management Company, the asset management company promoted by

, has entered into a strategic partnership with global real estate developer, owner and operator Tishman Speyer to invest and develop commercial properties across key cities of India.

Through this first ever alliance in the country between a fund house and an international real estate major, Axis Asset Management Company is raising up to Rs 1,500 crore including a green-shoe option, while Tishman Speyer will act as the exclusive development manager for the platform.

The fund Axis Commercial Real Estate Fund will be a category II alternative investment fund that will see both Axis and Tishman Speyer co-invest up to 10% of the fund size.

The joint platform will invest in early stage or greenfield commercial real estate projects across top 8 markets of the country including Mumbai Metropolitan Region, Bangalore, Hyderabad, Pune, the National Capital Region, Chennai and Kolkata.

“As Axis AMC partners with Tishman Speyer to tap into the greenfield commercial real estate opportunity, I strongly believe that together we can create a compelling offering in this asset class. This platform once again showcases Axis AMC as an asset manager that has been at the forefront of product innovation, offering quality long-term solutions to our investors,” said Amitabh Chaudhry, MD & CEO, Axis Bank.

The fund will be looking at investing an average Rs 150 crore to Rs 300 crore in each transaction and will target a gross pre-tax internal rate of return of 21% to 25%. It will have a total tenure of seven years from the date of final closing and will be looking at committing entire capital within 24 months from the final closing.

“Together Tishman and Axis will produce the next generation of high-quality office environments for local and global companies operating in India. We look forward to exploring potential opportunities in such key markets as Mumbai, Pune, Bangalore, Hyderabad and NCR,” said Rob Speyer, CEO, Tishman Speyer.

The fund with the development partner will own the project special purpose vehicle which in turn will own the land, building and the asset. The fund intends to utilise construction finance and lease rental discounting up to optimum limits to support the projects.

“Axis AMC is creating a market leading alternatives platform that provides unique non-correlated investment avenues. Although the market has products focusing on rent generating commercial assets, the Axis platform will provide a unique opportunity in the development stage in commercial assets,” said Chandresh Nigam, MD & CEO, Axis AMC.

Nigam is confident of the proposed platform achieving its objectives through a capable real estate team led by Balaji Rao who is managing partner, real estate, Axis AMC. Rao will be responsible for the planning and execution strategy of the platform.

The platform intends to invest in early stage or greenfield commercial real estate projects across 8 key markets, aiming to create best in class office buildings to be leased to key clients.

The platform will develop buildings with emphasis on sustainability, safety and serviceability. It plans to achieve this objective by exercising end to end control on the project lifecycle across design, development,

property management through its partnership with Tishman Speyer.

Axis AMC is confident of the long-term potential of the commercial real estate. The last 6-8 years have seen significant activity and deepening of secondary markets in commercial real estate through participation by both institutional and retail investors.

The resilience of the asset class has been evident through the improved demand in the last few quarters despite the pandemic. In terms of annual growth, Bangalore property market witnessed the highest prime office rental increase of over 12% from a year ago in June quarter, while Mumbai achieved the highest quarterly change at 7% in its prime office rental value, showed data from Knight Frank.

Both Axis and Tishman Speyer believe that this is an opportune time to create a platform to cater to the discerning demands of the occupiers in the post COVID era. The platform aims to achieve its objectives by leveraging Tishman Speyer’s capabilities in design, development, and property management with deep experience in developed markets.