Information Memorandum - Primeco Towers, Bangalore - Grade-A IT Office 5star Hotel, Hyatt Leased Retail June 2021
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Information Memorandum - Primeco Towers, Bangalore
[Grade-A IT Office ⸰ 5star Hotel, Hyatt ⸰ Leased Retail]
June 2021
1
Strictly Private and Confidential
COMPELLING INVESTMENT RATIONAL
10.50% • Lease Start Date is post Covid, Sep 2020.
Gross Yield
• New Asset | Part of larger development neighboring 5 star hotel (Hyatt)
Grade A+ • US based Grade-A technology Tenant
Tenant
• Tenant is locked-in for 5.50 years out of a total term of 9 years
5.50 year • Tenant has been paying rentals timely and regularly through the Covid pandemic
Lock-in
• Walking distance to upcoming metro
Covid led Vacancy • High going-in yield for a Grade A + asset in Bangalore
Low RISK
• Buying Rate comparable to premium residential rate in the close proximity.
Excellent • Excellent location with good connectivity via road and METRO
Location
2
Private and Confidential
SUPERIOR LEASE TERMS LIMITS RISK
+4 years into Covid
WFH ends per est.
Grade A Office supply shrinks
Tech Cos continue to grow as digitization explodes
Dec May Sep July Dec March Sep
2019 2020 2020 2021 2024 2026 2029
Lease
Registration Rent Start
Lease sign Post Covid Invest Lock-in End Lease End Date
3
Private and Confidential
STRONG LOCATION, QUALITY ASSET
Primeco Towers
Bannerghatta Road, Bangalore
Pre-leased 34,276 sft. in, located on main
Bannerghatta road, prime business district.
Mixed use Grade A+ completed asset with
office, retail and hotel.
Hosts major tenants:
Paychex, BIAS, Huron, Neustar, Central mall
etc.
An intimidating glass-clad building equipped
with 3 basements, grand lobby and podium.
4
Private and Confidential
PRIMECO TOWERS
PRIMECO Towers is a mixed use
Grade A+ development with prime
offices, retail and Hyatt Hotel.
It hosts some major players like
Paychex, BIAS, Huron, Neustar,
Central mall etc.
Its intimidating glass-clad building is
equipped with three level basement
car parking, a grand entrance lobby
and podium with vibrant spaces.
5
Private and Confidential
AREA BREAK-UP
Land Area 6.5 acres
Saleable Area 1.30 million sft.
Retail- A 2.00 lac sft.
Office- B 9.60 lac sft.
Hotel- C 1.33 lac sft.
Office Floor Plate ~80,000 sft.
Floor Efficiency ~75%
Elevators 10 Passenger + 3 Service
with 20 persons capacity
Escalators 6
Power back 100%
Specifications Warm-shell standard
specification with high side
AC
6
Private and Confidential
TENANT – USA BASED TECHNOLOGY COMPANY
VA, USA Headquarter
Founded 1996
Neustar helps top brands in technology, insurance,
internet , online banking, retailers etc. Customers 8,000+
Revenue US $700+ Million
Few of the Neustar clients: Listed NYSE
Neustar Inc. is a part of the Lockheed
Martin(American defense company). It’s unique
capabilities have made it the leader in the field of
Customer Analytics, Risk and Compliance,
Network & Communication and Security & Web
management services.
Chicago | Los Angeles | Louisville | New York | San Diego
San Francisco | Costa Rica | London
7
Private and Confidential
BASIC LEASE TERMS
Leased Area 34,276 sft.
Shot at site
Car-parking 45
Rent Commencement September, 2020
Monthly Rent Rs. 115/ sft.
Lease Term 9 Years
Lock-in period 5 years 6 months
Security Deposit 4.36 Cr. (12 months)
Warm Shell Rent Benchmarking (Rs./sft/month
Average in the same Lock In ends March, 2026
Neustar Market benchmark*
building
Rent Escalation 5% every year
71 77 80-85
8
*As per latest market info on latest lease at Kalyani magnum Private and Confidential
Prominent Occupiers in the Primeco Towers
Primeco Towers itself hosts several IT MNCs and other companies.
9
Private and Confidential
EXCELLENT CONNECTED LOCATION
10
Private and ConfidentialWALKING DISTANCE TO UPCOMING METRO & JUST 3 KMS FROM
OPERATIONAL METRO STATION
11
11
Private and ConfidentialPRIMECO TOWERS- MAJESTIC TRIPLE HEIGHT ENTRANCE PLAZA
Shot at site
12
Private and ConfidentialPRIMECO TOWERS- TOWER LIFT LOBBIES
Shot at site
13
Private and ConfidentialPRIMECO TOWERS- ELEGANT EXTERNAL LANDSCAPES
Shot at site
14
14
Private and ConfidentialPRIMECO TOWERS- GRAND TRIPLE HEIGHT RECEPTION LOBBY
Shot at site
15
Private and ConfidentialPRIMECO TOWERS- RECEPTION LOBBY WITH ESCALATORS
Shot at site
16
Private and ConfidentialPRIMECO TOWERS- VIBRANT PODIUM WITH CAFES AND RESTAURANTS
Shot at site
17
17
Private and ConfidentialPRIMECO TOWERS- MASTER PLAN
18
Private and ConfidentialPRIMECO TOWER B –TYPICAL FLOOR
19
Private and ConfidentialPROMINENT OCCUPIERS IN THE IMMEDIATE VICINITY
The asset is located in a well established business, retail and housing hub.
several major Indian companies, hospitals, institutions and MNCs in and
around its vicinity
20
Private and ConfidentialModern good quality fit-outs with all motorized height adjustable workstations
21
Shot at site 21
Private and ConfidentialFit-outs with Covid compliant working standards
22
Shot at site 22
Private and ConfidentialSTRONG FINANCIAL PROJECTIONS
Return Projections – 8 Year Average
Yield – Gross 10.50%
Yield – Net off Property Tax 10.40%
Yield – Net off YA fee, and Property Tax 9.90%
Gross IRR 12.59%
Net IRR 11.91%
Assumption
Year 8 is assumed as the year of exit for calculations
23
Private and ConfidentialCOST DETAILS
Particulars Amount (INR) Details
Total office area to be purchased 34,276 sft. with 45 car parking 75% carpet area efficiency
Purchase Price 50,00,00,000 • INR 14,587 per sft.
Add: Stamp duty 2,85,00,000 • 5.70% of Purchase Price
Add: Registration Charges 50,00,000 • 1.00% of Purchase Price
Add: Property Acquisition fee 1,50,00,000 • 3.00% of Purchase Price
Add: Legal fee 10,00,000 • As per Estimation
• Contingencies : 0.50% of
Add: Reserves 25,00,000
Purchase Price
Total Purchase Price 55,20,00,000
24
Private and ConfidentialYIELD
Your investment will yield a net yield of 8.31% in the first year of investment. This
yield will increase every year due to 5% escalation in rentals every year.
INR per sft. Year 1 Comments
Going in gross rent psft. 1385.23 Rs. 115 / sft. / month
Add: Interest on Deposit 63.60 Interest at 5.00% per annum
Total Gross Yield 1448.83
Less: Property Tax (30.00) Rs. 2.50 / sft. / month
Less: Management Fee (80.52) 0.50% of purchase price per
year
Net Yield 1338.30
Total Purchase Price per sft. Rs.16,105
Net Yield 8.31%
25
Private and ConfidentialSTRONG PROJECTED YIELD AND RETURNS
Net Yield Growth
12.00% 11.61%
11.05%
A projected investment of Rs. 10.51%
10.16%
10.00% 9.67%
25,00,000 will see an
9.19%
8.74%
estimated return of Rs. 8.31%
8.00%
17,313 per month in year 1
and Rs. 21,174 per month in
year 5. 6.00%
4.00%
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
Net Income in hands of investors per month in each year (INR)
Investment amount Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
25,00,000 17,313 18,209 19,149 20,137 21,174 21,887 23,012 24,193
50,00,000 34,625 36,417 38,299 40,275 42,349 43,774 46,024 48,386
75,00,000 51,938 54,626 57,448 60,412 63,523 65,661 69,036 72,578
26
1,00,00,000 69,251 72,835 76,598 80,549 84,698 87,549 92,047 96,771
Private and ConfidentialFINANCIAL PROJECTIONS
Particulars (INR) Day 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Total
Investment (55,20,00,000) - - - - - - - - (55,20,00,000)
Rentals - 4,74,80,026 4,98,54,027 5,23,46,728 5,49,64,065 5,77,12,268 5,96,00,476 6,25,80,500 6,57,09,525 45,02,47,615
Interest on deposit - 21,79,954 21,79,954 21,79,954 21,79,954 21,79,954 21,79,954 21,79,954 21,79,954 1,74,39,629
Gross Income - 4,96,59,979 5,20,33,980 5,45,26,682 5,71,44,018 5,98,92,221 6,17,80,430 6,47,60,454 6,78,89,479 46,76,87,244
Property Tax - (10,28,280) (10,28,280) (10,28,280) (10,28,280) (10,28,280) (10,28,280) (10,28,280) (10,28,280) (82,26,240)
Income - Net of Property
Tax - 4,86,31,699 5,10,05,700 5,34,98,402 5,61,15,738 5,88,63,941 6,07,52,150 6,37,32,174 6,68,61,199 45,94,61,004
Management fee - (27,60,000) (27,60,000) (27,60,000) (27,60,000) (27,60,000) (27,60,000) (27,60,000) (27,60,000) (2,20,80,000)
Income - Net, YA Fee &
Property Tax - 4,58,71,699 4,82,45,700 5,07,38,402 5,33,55,738 5,61,03,941 5,79,92,150 6,09,72,174 6,41,01,199 43,73,81,004
Exit Value - - - - - - - - 67,81,61,068 67,81,61,068
Pre tax net cash flows (55,20,00,000) 4,58,71,699 4,82,45,700 5,07,38,402 5,33,55,738 5,61,03,941 5,79,92,150 6,09,72,174 74,22,62,267 56,35,42,072
Gross IRR 12.59%
Net IRR 11.91% Very attractive purchase price for a grade A+ office space with
Profit on investment Rs.56,35,42,072 warm shell specifications and Fit-outs plus 45 car parking. Rate is
MoIC 2.08x comparable to premium residential rate in the close proximity
Note: Please refer the financial model for more details
27
Private and ConfidentialSENSITIVITIES
Even on a conservative capital appreciation of 2% per annum, the investment will yield net
compounded returns of 11.47% per annum and 2.02x MoIC
Sensitivities to capital appreciation
1.00% 2.00% 3.00% 4.00% 5.00%
Net IRR 10.74% 11.47% 12.20% 12.95% 13.71%
Multiple 1.93x 2.02x 2.11x 2.22x 2.32x
Sale Price Psft. (INR) 17,439 18,869 20,401 22,040 23,794
Profit on total 48,31,17,905 53,21,36,982 58,46,38,089 64,08,31,120 70,09,36,409
investment (INR)
28
Private and ConfidentialKEY RISKS
Risk Level
Completion risk None - Fully constructed
Leasing risk Low - Investment linked to preleased rentals, locked in for 5.50 years
Title risk Low – Freehold property
None - OC approved building from BBMP. Development plans
Approval risk
approved by local government authority (BBMP & BDA)
Low- Neustar has signed the lease during the Covid pandemic and
Vacancy considering a long lock-in period and high profitability, the vacancy risk
is significantly low
29
Private and ConfidentialKEY INVESTMENT TERMS
Minimum- INR 25 lacs
Investment Amount (can be scaled in the multiples
of INR 5 lacs)
0.50 % of the invested amount
Management Fee
per annum
Shot at site
30
Private and ConfidentialOWNERSHIP STRUCTURE
Investor
Manages all
Securities of SPV
issued to investors the cash
flow
Facilitator SPV *
YieldAsset Escrow Agent /Trustee
Manages the asset
Asset *Special Purpose
Vehicle
31
Private and ConfidentialABOUT YIELD ASSET
Yield Asset is a tech platform disrupting
real estate investing for small investors.
We offer fully vetted real estate investment
opportunities with fractional ownership.
Yield Asset aims to offer compelling risk-
adjusted pocket friendly opportunities.
Our vision is to be the most trusted
platform for real estate investments with
asset-level transparency and ease of
liquidity.
32
Private and ConfidentialWHY YIELD ASSET
Investment in rental yielding commercial
real estate has generated great wealth to
investors. However, it has been available
only to those with right connections and
deep pockets. This asset class and its
benefits has been out of reach for most of
people.
Yield Asset’s endeavor is to simplify the
investment process and pocket-size the
investment amount so that small investors
can add its benefits to their investment
portfolio.
33
Private and ConfidentialOur members to have friction-less access to pre-screened
commercial real estate investment opportunities
Experienced Team Curated opportunities Lower Fee
▪ +50 years of investing • We offer only pre-screened • Lower fee compared to
experience collectively properties. market
▪ “Feet on the ground” real • Fully vetted through rigorous due- • We align our fee over the
estate knowledge diligence process property ownership cycle to be
▪ Diversified board for industry fully committed.
• Provide regular reports and access
leading governance
to investment dash board.
Full service with Active Property
transparency Ease of Liquidity
Management
• End to end service including • Active property management • Secondary sale of securities on
screening, investment, lease platform
• Active engagement with
management and administration.
tenants. • Wider investor base for deeper
• Provide granular details and market and better liquidity
• Management of compliance,
disclosure
accounts and rent distribution
• Regular updates
34
Private and ConfidentialEXECUTIVE TEAM
We have a strong team with extensive experience in institutional real estate
investing and technology.
RAJESH BINNER GOUTAM
Co-founder, Investment Director Sales & Operations
20+ years experience in real 20+ years experience
estate • Leasing, Sales, Marketing
• Real estate Development and CRM
• FDI Investments • Mixed-Use development
• Banking & Finance specialist
• Leasing • Work experience from
International Markets i.e.,
• Advisory & deal structuring
Dubai and Dhaka
MBA, Mumbai University
MRICS
33
Private and ConfidentialOUR MENTOR & ADVISOR
KALPESH MAROO NAVIN DHANUKA
PARTNER – DELOITTE INDIA MANAGING PARTNER - UNITERN ADVISORS
MENTOR ADVISOR
Chartered Accountant MBA, ICFAI
Kalpesh is a tax expert and currently a partner at Navin has rich experience in the real estate industry
Deloitte India. He has rich expertise in taxation and across asset management, real estate management,
deal structuring aspects in the fields of investment financial structuring, corporate finance, etc.
trusts, mergers and acquisitions, private equity, etc.
Previously, he was a senior Principal at Piramal fund
Previously, he was a Partner at BMR Advisors and management and a senior Vice President at Walton
worked at Ernst & Young. Street India.
36
Private and ConfidentialCommercial Real Estate (CRE)
An unexplored asset class for non Ultra HNI investors
Commercial real estate refers to properties used for business purpose and yields regular rental income. It
includes office space, retail malls, industrial/ warehouse spaces etc. It serves as a hedge against inflation and
appreciates as the economy grows.
.
37
Private and ConfidentialLow Risk
We help you build
Debt/ FD
Institutional grade CRE CRE
portfolio
Lower Returns Higher Returns
Earn rentals, create a more
defensive portfolio with commercial
Mutual
real estate and improve your risk- Equity
Funds
adjusted returns.
High Risk
Cash Flow Non-Correlated
Capital Preservation
Commercial real estate The performance of commercial real
Real estate, when properly managed, is
can generate stable and estate is not closely correlated with
a hard asset that preserves capital. 38
predictable cash flow. stocks and bonds.
Private and ConfidentialCRE INVESTMENT IS BETTER
Residential Commercial (CRE)
Rental Income Ranges 2%-4% p.a. of capital investment Ranges 7%-11% p.a. of capital investment
Depends on comparable properties which is Depends on demand for office space which
Capital
hard to ascertain and grows at a slower grows at a fast pace every year and can
Appreciation
pace. lead to higher appreciation
Individuals. Corporate/ MNCs
Quality of
Not easy to assess and ascertain thus Assessable and hence one can reduce
Tenant
exposed to default risk default risk
Longer well documented and negotiated
Shorter that ranges between 6 and 12
Lease Term lease terms that ranges between 5 and 10
months
years with lock-in period etc.
39
Private and ConfidentialCRE STAGES TO INVEST AND RISK PROPOSITION
Completed and un- Completed and
Risks Under construction
leased leased
Zoning
Title
Vacancy
Completion
Leasing
40
Private and ConfidentialInvestment scenarios in CRE- Grade A
Type of ownership Who invests Challenges
Mainly available to Ultra HNIs Competition with the developers for
Exclusive Ownership
Family offices, Institutions leasing, not available to smaller investors
Property is managed by builders who
Bought by HNIs and Ultra HNIs, generally charge high margin. Dependency
Factional Ownership
only UDS is registered, area on builder for tenant and property
bought from builder
bought remains unmarked management. not available to non HNI
investors
Property and tenant management.
Group of known HNIs invest
Group Buying Generally exit is a issue not available to
jointly in a property
smaller / average investors
Fractional Investment
Small average investors, HNIs Ownership is through SPV
with fractional ownership
41
Private and ConfidentialFRACTIONAL OWNERSHIP
• Start investing with small capital in
Method of part ownership via a SPV
grade A commercial properties which
where multiple investors get fractional
otherwise is not available to non HNI
exposure to a high value tangible asset
investors.
and thereby capturing benefits of high
• Diversify your portfolio by investing
yielding asset while mitigating risk.
in multiple properties fractionally.
• Better efficiency: Buying big with
Fractional investment enables high
• Low Vacancy: Fractional
Investment is normally done in
ticket size properties which have
pre-leased Grade-A assets which
higher floor efficiency which leads to
tend to have lower vacancy levels
better rental income.
and risks
• Grade-A assets of can be
purchased. These properties are
• Property and tenant management:
Managed by professionals,
leased to grade A tenants with very
hassle-free regular income.
secure lease deeds with detailed and
well negotiated lease terms.
42
Private and ConfidentialYIELD ASSET HELPS INVESTORS OWN
INSTITUTIONAL GRADE REAL ESTATE AND
DIVERSIFICATION WITH FRACTIONAL
OWNERSHIP
43
Private and Confidentialwww.yieldasset.com
Mayank - +91 96209 99001 | Ayush +91 84858 19894
Email – query@yieldasset.com
Disclaimer: Yield Asset and its affiliates are in brokerage and listing of real estate opportunities. This material should not be construed as an offer to sell or the solicitation of an offer to
buy any security in any jurisdiction where such an offer or solicitation would be illegal. We are not soliciting any action based on this material. This document is for the general “information
only” and is not, and under no circumstances is to be construed as, an offer to sell or a solicitation of an offer to buy any securities, derivatives of any security or as an offer to provide any
portfolio management services, investment advisory services or any securities market related services. This document has not been registered with or approved by any supervisory or
regulatory authority. Nothing contained herein may be relied upon as a guarantee, promise, assurance, or a representation as to the future. No assurance can be given that the objective
or strategy or vision or mission regarding the services offered by us will be achieved or that the participants will receive return of their principal deployed or not incur losses, including loss
of principal deployed. The recipient is cautioned not to put undue reliance on any of the assumptions, scenarios, projections, representative data, expected yields or other information
contained herein. Certain transactions including those involving real estate investments, futures, options, and other derivatives as well as non-investment-grade securities give rise to
substantial risk and are not suitable for all investors. The material is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should
not be relied on as such. Opinions expressed are our current opinions as of the date appearing on this material only. We endeavor to update on a reasonable basis the information
discussed in this material, but regulatory, compliance, or other reasons may prevent us from 44 doing so. The recipients should also note that there can be no assurance that any of the
prospective opportunities described in this document will be consummated or any other arrangement with any other person will fructify, or in either case continue even if consummated or
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