RMZ Corporation, a Bengaluru-based company, is set to expand its presence globally. The company's ambition is to become an 'Indian-founded but global alternative asset owner.' According to Mihir Menda, a member of RMZ Corporation’s Supervisory Board, the company aims to close several real estate deals in the US, EU, and UK within the next 12 to 15 months.
Global Expansion Plans
Mihir Menda revealed to HT Digital that the company has plans for international growth. 'It is undoubtedly rooted in risk management. The tale of India is amazing. However, we aspire to be an Indian-founded, worldwide owner of alternative assets,' he stated.
The company has been actively exploring opportunities in the UK and the EU. Moving out of India is seen as a fantastic transition. In the years to come, the US will also be a focus, especially since the country’s commercial real estate is experiencing a mini-depression. Menda noted that the current market conditions present an opportune moment for investment due to the capital-rich structure.
'There are good opportunities where you can invest for the long term,' he added. Mihir Menda, a second-generation leader based in the US, is involved in establishing strategic alliances and researching potential new international markets.
Ambitious Goals
By 2032, RMZ hopes to own $100 billion worth of assets in its portfolio. Menda described the goal as 'ambitious but achievable.'
The company is looking to invest in opportunities with a shorter investment horizon. This could include brownfield sites where a developer may have defaulted. 'We could dive in and finish it by contributing our expertise. That eliminates the need for the first two to three years of foundation work, excavation, obtaining permits, and other associated hazards,' Menda explained.
The company is also open to considering the acquisition and investment of certain core portfolio opportunities. This could include Grade B plus Grade A assets they believe have room for additional value.
In December 2020, RMZ Corporation sold a substantial portion of its commercial portfolio to Brookfield for $2 billion, including co-working space and 18% of its commercial assets. So far, the company has sold 12.8 million square feet.
Diversification and Growth
The privately-held company, led by the Menda brothers, has chosen to expand into other real estate markets after specializing in building Class-A office buildings. In November 2023, RMZ Corporation announced a significant investment of $7 billion over the next five years to develop $25 billion worth of office, residential, warehousing, hospitality, and mixed-use projects across major cities as part of its business expansion strategy.
RMZ intends to concentrate on asset classes that offer higher dollar returns. Mihir Menda explained that the company is focusing on asset classes and regions that 'give better dollar returns.' 'It is that simple. If the residential prices are comparable today, it could be Manhattan or Mumbai, or it could be, you know, one or the other wherever the deal looks sweeter,' he said.
Distressed Assets and Opportunities
RMZ is also considering distressed assets. 'In general, we are considering investments, assets, and project developments—both green and brownfield—that have the potential to add value,' Menda clarified. 'You might be able to invest 20 cents to a dollar because the asset itself generates rent, even though the current owner might have, for example, fallen behind on the loan. It could be an opportunistic investment or, occasionally, a core investment. Simply put, you are investing at the right time to ensure it will be profitable,' he added.
When asked if the company would invest internationally through a subsidiary, Menda responded that the real estate company is not considering doing business with other entities. 'Our goal is to have RMZ, the owner of global alternative assets with funding from India. As a result, RMZ will be handling it rather than a set amount of capital,' he said.
The company is considering an international foray and comparing opportunities in Mumbai and Manhattan. 'We simply compare the areas where we receive higher returns before investing. We are not comparing sources or setting aside any quantum for this,' Menda stated.
Timelines and Comparisons
According to Menda, the company is aggressively pursuing opportunities for global expansion and expects to close a few deals within the next 12 to 15 months.
In terms of comparing Indian and international real estate markets, Menda claimed that commercial real estate in India is relatively shielded from the real estate problems faced by other nations. For instance, Class A commercial assets in Manhattan are trading at 25 to 30 cents on the dollar due to mismanagement of cash flows, rising finance costs, and asset refinancing difficulties. However, none of this is happening in India. 'And the beauty of India is that, despite being on the verge of overtaking the United States as the world’s third-largest economy, it remains relatively immune to the real estate crises plaguing most of the other economies we discuss, particularly those in Europe and the United Kingdom,' he concluded.