Brookfield in talks to buy RMZ's co-working solution provider CoWrks

Canada’s Brookfield Asset Management Inc. is in talks with Bengaluru-based office space developer RMZ Corp to buy out the latter’s co-working solution provider CoWrks, said sources in the know.

Brookfield will reportedly acquire some assets of RMZ in Bengaluru, Chennai, Mumbai and other cities, added sources. “The valuation and terms of the deal are still being worked out,” they said.

CoWrks, founded by Menda family scion Sidharth Menda, has around 16 co-working centres in the country and operates in Bengaluru, Mumbai, Hyderabad, Delhi National Capital Region, among others.

“Brookfield is keen as most co-working clients move into RMZ spaces. Since Brookfield is evaluating RMZ asset acquisition, there is an integration factor,” said sources, adding that the buyer of RMZ properties can derive maximum synergies between the properties and CoWrks.

A Brookfield spokesperson declined to comment. RMZ, too, did not offer a response till the time of going to press.

“For Brookfield, CoWrks fits into the strategy of shared spaces. It has evinced an interest in co-living spaces,” said the source quoted earlier.

It was in talks with Mumbai International Airport to lease 15 acres of land in Mumbai. The fund manager also has plans to scale up the venture.

In June this year, Brookfield bought two floors from Jet Airways in Mumbai’s Bandra Kurla Complex for Rs 490 crore.

Brookfield owns 22 million square (sq.) feet (ft) of commercial properties in the country. These include corporate parks it bought from Unitech Corporate Parks in Gurugram and Kolkata, commercial property in Powai area of Mumbai which it bought from the Hiranandani family. It has also bought hotels from The Leela Hotels last year.

Brookfield could bring the acquired assets from RMZ’s portfolio into its proposed real estate investment trust (REIT), said sources.

Brookfield plans to file papers for its REIT in some months and plans to list it by the end of the year, informed sources.

RMZ owns 21 million sq. ft of commercial properties in the country. It has 35 million sq. ft of under-construction properties.

 RMZ is selling its assets to become a zero-debt company. “RMZ wants to be debt-free and generate liquidity after a prolonged lockdown,” said sources, adding, “Since the company is family owned, it does not want to float an REIT to raise funds.”

WeWork India, CoWrks’ rival in the country, is owned by Bengaluru-based Embassy Group’s Virwani family.

In 2017, WeWork Global struck a partnership with Embassy Group to enter the Indian market. WeWork India has 34 centres comprising 60,000 desks across six major cities.

Though the co-working space is hit by the Covid-19 pandemic, experts say the segment will grow eventually.