INVESTMENT MEMO – BRIGADE METROPOLIS SUMMIT A, BANGALORE

September 2019
 Investment Overview

Brigade Metropolis Summit A is a premium office space in Whitefield, 8.76% YIELD

Bangalore. Currently leased to Capgemini, a Fortune 200 company, Summit A is
a high-rise office building and is part of a mixed-use development built by the
Brigade group. Brigade Metropolis is in a fast-growing commercial hub in
18% IRR
Bangalore and is next to an upcoming metro station. The property is currently
valued at INR 19.4 crores (INR 8,607 per sft) and has a rental yield of 8.76%.

2.09X MOIC

Core Asset A+ Tenant Metro

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 About the Property
Brigade Metropolis Summit A and B measures
around 7.5 lakh sft of grade A office space.
Aside from Capgemini, the property has other
blue-chip tenants including E&Y, Honeywell, GE,
and EYGBS India.

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 Location Overview
Whitefield main road is a well-developed zone with commercial, residential, and retail developments. Both
Phoenix Market City and VR Mall are in the vicinity.

Brigade Metropolis

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 Connectivity

Right Outside
Brigade Metropolis
Brigade Metropolis is well connected to the rest of
Bangalore via the city bus network. Autos and Cabs are
also easily available. The Property is situated right next to
an upcoming metro station. An extension of the Bangalore
Metro’s Purple line, it is expected to open in 2021.

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 Property Master Plan

Brigade Metropolis is spread over 40-acre property on Whitefield

Main road. It has around 7.5 lakh sft of office space, 1500+
residential apartments and a retail centre called
The Arcade.

Strata’s Unit of 22540 SFT is

facing the Whitefield Main Road

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 Floor Plan

The investment opportunity measures 22,540 sft and

is the entire 3rd Floor of Tower A.

Strata’s Unit is
22,540 SFT

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 Building Images

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 Office Exterior

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 Office Interior

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 Tenancy Details

Lease Terms

Lease Commencement August 2019

Monthly rent (Rs./SFT) Rs. 58.54

A French multinational and a global
leader in consulting, technology services Escalation% 5% per annum
and digital transformation
Security Deposit Rs. 1,58,33,900
• Market Cap: USD 16.5 Billion
Lease Duration 3+3 years
• Office: 40 countries
Lock-in Period 1.5 years
• Global Employees: 2,00,000
Lock-in Ends February 2021
• Indian Employees: 1,00,000+

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 Lease Timeline
Capgemini has signed a 3-year lease commencing from August 2019 with an optional extension for another 3 years.

Current Date
Sept/Oct 2019

Lease Start Date Lock-in End Date Lease End Date

Aug 2019 Feb 2021 Aug 2022

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 Recent Lease Comp
Average rent in vicinity is 50-60/ SFT* Strata’s Unit has been leased at the market standard rate going on in that area.

Quarter Building Tenant Area SFT Rent**

(Rs/SFT/MONTH)

Q1 2019 Bagmane Solarium Cognizant 4,83,000 Rs. 50-61

Q1 2019 ITBP Sabre Travel Technology 80,000 Rs. 50-55

Q1 2019 Trifecta 91 SpringBoard 67,000 Rs. 38-43

Q1 2019 Sigma Soft Tech Park SM Shop A Docket 15,000 Rs. 58-63

Average Rent Rs. 52

Strata’s Unit is leased out at Rs. 58.54

* Source: Colliers International: Office Market Snapshot Q1 2019

**Source: CBRE Q1 Bangalore Report / Cushman & Wakefield H1 Report
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 Investment Breakup
We believe the pricing, location (upcoming metro line), rental yield, tenant and quality of the development will lead
to significant upside over the next 4-5 years.

Particulars Amount(Rs) Details

Gross Purchase Price Rs. 18,59,55,000 Rs. 8250 / SFT

Add: Stamp Duty Rs. 4,64,888 0.25% of Purchase Price SPV Transfer

Add: Management Fee Rs. 18,59,550 1% of Purchase Price

Add: Acquisition Fee (onetime) Rs. 37,19,100 2% of Purchase Price

Area SFT

Add: Legal Fees Rs. 10,00,000 Estimated 22,540

Add: Reserve (Refunded on sale) Rs. 10,01,462 Contingencies Purchase Price

Rs. 8,607
Net Purchase Price Rs. 19,40,00,000

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 Expected Rental Yield
Investors would be entitled to a rental yield of 8.76%

Particulars Year 1 Details

Rent Rs. 702 Rs 58.54/ sft / mth

Add: Interest on SD Rs. 51 7.3% on actuals

Gross Rent Rs. 754

Less: Management Fee Rs. 85.6 1% of purchase price / year

Total Purchase Price (SFT)

Net Rent Rs. 668 Rs. 8,607

Gross Yield

8.76%

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 Rental Yield
Rental Yield increases to 10.64% due to contracted rent escalation of 5% per annum for 5 years.

10.64%
10.50%
10.14%
10.00%
9.66%

9.50%
9.20%

9.00%
8.76%

8.50%

8.00%
Year 1 Year 2 Year 3 Year 4 Year 5

Rental Yield

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 Financial Model
The Investment will return a targeted 18% IRR and 2.09 multiple over 5 years.

Financial Model and Returns (All prices are in Rs.)

Quarter Day 0 Year 1 Year 2 Year 3 Year 4 Year 5 Total

Total
(19,40,00,000) (19,40,00,000)
Investment

Rental Income* 1,58,33,899 1,66,25,594 1,74,56,874 1,83,29,718 1,92,46,203 8,74,92,288

Interest on
11,55,851 11,55,851 11,55,851 11,55,851 11,55,8511 57,79,256
Deposit**

Sale Value*** 31,08,28,429

Total (19,40,00,000) 1,69,89,750 1,77,81,445 1,86,12,725 1,94,85,569 33,28,40,994 21,17,10,484

* Rs. 58.54/SFT Rents and 5% escalation per year

Profit IRR Multiple of Invested Capital ** 7.3% interest on actual deposit
*** Assumes 10% annual growth rate
Rs. 21,17,10,484 18% 2.09x
(*) Excluding management fees

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 Growth Sensivity
Even at a conservative 5% per annum capital appreciation, the investment will return 13.8% IRR and 1.76x multiple of capital.

Growth Rate 5% 8% 10% 15%

IRR 13.8% 16.3% 18.0% 22.4%

Profit Rs. 14,68,70,167 Rs. 18,43,21,191 Rs 21,17,10,484 Rs 28,94,74,838

Multiple of
1.76x 1.95x 2.09x 2.49x
Invested Capital

Sale Price / SFT Rs. 10,985 Rs. 12,646 Rs. 13,861 Rs. 17,311

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 Investment Summary
Given the location (with the upcoming metro line), rental yield, grade A tenant, and the quality of the development,
we see a significant upside over the next 4-5 years.

Grade A Upcoming Metro

8.76% 18% | 2.09x
Grade A building Garudacharpalya
Rental Yield IRR | Multiple of Capital
and Tenant Metro Station

High Rental Yield High Returns Leased to With the upcoming

with Low Risk Capegemini Technologies metro there is likely to
Property developed and be a significant upside
maintained by Brigade Group in rental yields and
capital appreciation

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 Contact us
Funding ends in November 2019.
To make an investment reach out to us at
www.strataprop.com

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