How India’s Biggest Real Estate Deal Happened During COVID? - Thirumal Govindraj

“Debt was not an issue. Rentals were getting paid. So the rents take care of debt. It was required for us to become a national player. We needed that kind of impetus to get out and grow.”

The CEO of RMZ Office and RMZ NXT was being asked, implicitly, whether the company had been forced into the Brookfield deal by financial pressure. Thirumal rejected the framing. The deal was strategic. The COVID timing was incidental. The deleveraging was a side effect. The actual goal was geographic transformation.

This is the part of the RMZ story that almost nobody told when the Brookfield announcement was made.

The Pre-2020 Position

The starting point is what RMZ looked like before the deal.

“You had a 25, 27 million square feet portfolio, which we built in five years. We delivered seven and a half million square feet in three and a half, four years in Bangalore.”

This is the scale that almost no other Indian real estate firm has matched at this pace. 25 to 27 million square feet of commercial portfolio in five years is roughly equivalent to building one major business district every twelve months.

The implication is that RMZ entered 2020 from a position of strength, not weakness. The company had been growing fast and capitalising the growth without obvious distress.

The Debt Question

The standard real estate question when a firm is growing this fast is leverage.

Thirumal’s framing was direct.

“Debt was not an issue. Rentals were getting paid. So the rents take care of debt.”

This is the operating signature of a well-built commercial real estate portfolio. The rental income services the debt automatically. The leverage is not speculative because it is matched by long-duration income contracts with high-quality tenants.

This is also the part that makes the COVID context less alarming than the public narrative suggested. RMZ’s tenants paid through COVID. The rental income continued. The debt service was never at risk. The company did not need to sell.

The Strategic Decision To Sell

If the company did not need to sell, why did it?

“I think the vision of the promoters at that time was: how do you de-leverage and grow? I think that was the best thing.”

The deal was a choice. The existing portfolio was producing reliable rental income. The market opportunity was creating new geographies the existing portfolio did not address. The Brookfield offer made it possible to convert the static income-producing portfolio into deployable capital for the new geographies.

This is strategic capital recycling. The firm sells mature assets to fund growth in new markets.

The Decade-Old Portfolio Thesis

The structural fit becomes clearer when you understand what was being sold.

“A lot of the portfolio was a decade-old portfolio.”

This is the critical detail. The assets sold were not the newest. They were the oldest. The decade-old portfolio had three properties that made it ideal for the deal.

It was producing stable rental income, which made it valuable to Brookfield. The maturation curve was complete. The capital tied up in these assets was no longer the highest-return use of that capital for an active developer.

For Brookfield, the same assets were ideal. Brookfield is a long-term institutional capital pool that wants stable income-producing real estate. The decade-old RMZ portfolio fit the brief precisely.

The deal was a Pareto-optimal capital reallocation. RMZ got capital it could deploy more productively. Brookfield got assets that fit its mandate. The cap rates achieved were the best available in the country.

The Going-National Move

The strategic purpose of the freed capital was the geographic expansion.

“By doing that, we were able to take ourselves and grow across the country. We become more of a national player then.”

This is the line that explains the entire RMZ story since 2020. The company stopped being a Bangalore firm. It started being a national platform.

The post-deal acquisitions traced the geographic strategy.

“We were able to buy land in Bombay. We were able to do deals in Pune. We bought a property in Delhi. So these are the things which we did, and that’s how the business has grown so big now.”

Mumbai. Pune. Delhi. These are markets where RMZ had limited or no presence before 2020. The Brookfield capital was the funding mechanism for entering each of them.

Today, RMZ operates as a national commercial real estate platform with 70 million square feet developed and more in the pipeline. The footprint includes Bangalore, Hyderabad, Mumbai, Chennai, Pune, Delhi, and Gurgaon.

Why The Strategy Worked

The strategy worked because three conditions were aligned.

First, the existing portfolio was mature enough to be sold without losing optionality. The decade-old assets had passed their high-growth phase. Selling them did not sacrifice future upside.

Second, the geographic markets being entered were ones where RMZ’s existing tenant relationships could be leveraged. The clients who had moved to Mumbai, Pune, and Delhi were already RMZ clients in Bangalore. The expansion was client-led, not speculative.

Third, the buyer of the existing portfolio was a long-term institutional partner who would maintain the operational standards RMZ had established. Brookfield is not a flipper. The decade-old portfolio is being managed for income.

The Universal Pattern

Capital recycling at this scale is rare in Indian real estate. Most Indian real estate firms either keep mature assets indefinitely or sell them under distress. The strategic mid-cycle sale of mature assets to fund growth in new geographies is a model more common in global commercial real estate than in the Indian market.

The reason it is rare in India is structural. Most Indian real estate firms do not have the depth of institutional buyer relationships required to execute a deal of this size. The buyer pool for 12.8 million square feet is small globally and even smaller in India.

The other structural reason is operational. Most Indian real estate firms do not have the bench strength to manage a major sale and a major expansion simultaneously. RMZ did. The team that ran the Brookfield deal was different from the team that ran the going-national acquisitions. The bandwidth was sufficient for both.

What Other Firms Should Learn

The Brookfield deal is now a case study other Indian real estate firms should study.

The model works when a firm has a mature portfolio that an institutional buyer wants, growth opportunities in new geographies that need capital, and the operational capability to execute the transition without losing momentum.

The model does not work when the existing portfolio is not mature enough to attract institutional capital, when the new geographies are speculative rather than client-led, or when the operational team is not deep enough to manage both the sale and the expansion simultaneously.

For investors, the Brookfield deal reframes how to evaluate Indian commercial real estate firms. A firm that has been quietly building a mature, high-quality portfolio over a decade may be more valuable than its current footprint suggests, because the optionality to recycle that capital into new growth is itself a form of latent value.

The Cycle Continues

The next test of the RMZ strategy is whether the same capital recycling move can be repeated as the post-2020 acquisitions mature.

The decade-old portfolio sold to Brookfield was the first generation of RMZ developments. The current pipeline of Mumbai, Pune, and Delhi developments will, in roughly a decade, become the next generation of decade-old assets. The question is whether RMZ will recycle them again into the next wave of geographic expansion, or hold them as the income-producing foundation of a mature operating business.

The answer to that question will reveal whether the Brookfield deal was a one-time strategic move or the establishment of a permanent capital allocation cycle. The latter would be the more interesting outcome. It would suggest that RMZ has built a continuous platform for converting mature commercial real estate into new geographic growth.

What I Took Away

Three things from this segment will stay with me.

The capital recycling reframe. The Brookfield deal was not a defensive move. It was the most strategically clear capital reallocation in Indian commercial real estate in years.

The decade-old portfolio thesis. The structural reason the deal worked is that RMZ sold the right assets to the right buyer at the right time. Mature assets sold to institutional capital fund growth in new geographies.

The going-national execution. The post-deal acquisitions across Mumbai, Pune, and Delhi were not opportunistic. They were the strategic deployment of the freed capital. The Brookfield deal funded the national platform.

You may agree with Thirumal Govindraj’s framing. You may push back. The 70 million square feet developed across seven major Indian cities is hard to argue with.

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