PropShare Capital, a SEBI-registered Category II AIF manager, is launching PropShare Real Estate Fund II (PREF II) as the sequel to their successful PREF I commercial office fund. PREF I has fully allocated its resources to four prime office properties in Bangalore and Mumbai, leased to top-tier tenants like LG, Tata Finance, and 24/7 AI. PREF II will continue its focus on fully developed Class A commercial real estate, catering to multinational and blue-chip tenants in India's tech hubs. It targets to raise Rs. 500 crores with an additional Rs. 200 crores as a green shoe option. The fund's minimum investment is Rs. 1 crore in line with AIF regulations.
PropShare Capital, a Category II AIF manager registered with SEBI, announced the launch of PropShare Real Estate Fund II (PREF II), the second scheme within their existing Category II Alternative Investment Fund (AIF). This follows the successful deployment of their initial commercial office fund PREF I. PREF I has been fully utilized across four office properties in Bangalore and Mumbai, all of which are fully leased to esteemed Grade A tenants such as LG, Tata Finance, and 24/7 AI.
PREF II will similarly concentrate on fully developed Class A income-generating commercial real estate properties, leased to multinational and blue-chip tenants in India's technology hubs. The fund aims to secure Rs. 500 crores in capital, with an additional Rs. 200 crores available through a green shoe option. The minimum investment requirement is set at Rs. 1 crore, aligning with AIF regulations.
The Indian office market is predicted to perform strongly due to an increase in outsourcing following the economic downturn in the West, prompting multinationals to establish new Global Capability Centres (GCCs) in India, which offers cost savings of approximately 7-8 times. Domestic tech companies are also expanding rapidly, with many large firms now urging employees to return to the office, thereby fuelling the demand for office space.
Founded in 2016 by Moktan and Hashim Khan, Propshare allows users to access institutional-grade assets with 8-10% in-place rental yields and 17-20% returns. The company handles the sourcing, due diligence, property management and sale on behalf of users, and claims to be owning, managing and exiting commercial real estate in a simple and transparent manner.
PropShare boasts a team that played a pivotal role in establishing, investing in, and expanding the office asset portfolio for The Blackstone Group, a global real estate fund and leading office investor in India. The investment team possesses a collective institutional real estate investment experience exceeding $3 billion in assets.
Kunal Moktan, CEO and Co-founder of PropShare Capital, expressed his enthusiasm for the launch, stating, "The current high inflation and interest rate environment have increased yields on all asset classes, including commercial real estate. Since yields tend to rise as asset prices fall, high-quality Class A office spaces are now available at distressed prices. Developers are facing challenges due to the burden of high-interest debt used for land acquisition and construction funding. This has forced them to raise capital by monetizing their assets. Given the subdued investment climate and a scarcity of capital providers, only the highest quality assets are currently tradable. This presents a unique, one-time opportunity for opportunistic investors to acquire quality Class A assets at yields exceeding the market rates."
The fund is primarily intended for institutional investors, High Net Worth Individuals (HNIs), family offices, and select sophisticated domestic and NRI investors. PropShare Capital's current investor base includes institutional investors, family offices, HNIs, ultra HNIs, as well as senior and mid-level management personnel from prominent tech, financial services, and consultancy companies, along with tech startup founders.
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