Private equity firm Xander Group builds entire office portfolio on its own

Private equity firm Xander Group has built its entire office portfolio in the country on its own, as opposed to global peers such as Blackstone and GIC that have taken the joint venture (JV) route.

Xander has been investing in commercial assets since 2006 and owns over 6 million squre feet of office assets. The firm has operating assets across multiple cities, including Bengaluru, Chennai and Delhi. 

“We have chosen to build a 100 per cent owned office portfolio, rather than investing in joint ventures, because it allows greater operational flexibility and value-creation opportunity,” said Arpit Singh, principal-investment group, Xander Investment Management. “It also gives us full exposure to the underlying office investments and the value we create, unlike a JV, where only part of the upside is captured.” 

Over the past 12 years, Xander had built a focused office team, which had an on-ground presence across major cities, and the experience and expertise to execute the company’s long-term value-creation plan, Singh said, adding “we are happier to be the masters of our own destiny for this strategy”.

Xander recently exited two large joint venture projects in Mumbai and Pune that it had invested in at the development stage. These projects, now complete or nearing completion, had large office components (about 1 million sq ft office space in total). 

Blackstone, in contrast, formed JVs for office properties. It has a JV with the Embassy group of Bengaluru, named Embassy Office Parks, and another with Panchshil Realty of Pune. It also picked up a 20 per cent stake in K Raheja Corp. Together with partners, it owns 70 million sq ft, making it the largest owner of office properties.

GIC also owns 40 per cent each in the rental arm of DLF and the Prestige group of Bengaluru.

However, Xander partnered Dutch pension fund APG to form a JV, which acquired its retail assets in 2016. APG owns 77 per cent and Xander owned the rest in the JV.

“This is a management strategy and there is no direct comparison between the three. Xander’s strategy is a differentiated strategy and showcases their eagerness to become a long-term significant player in the office market. A 100 per cent ownership allows them to control the asset totally. They have followed the same strategy in retail and succeeded. So, there is no reason to doubt this while they look at office assets,” said Shobhit Agarwal, managing director at ANB Capital Advisors.