India Investment Property » Realty Firm

Unitech looks for $560 million from PE funds

Wed, 14 Jan 2009 10:17:53 +0000

India’s second-biggest real estate developer Unitech is in talks with private equity (PE) funds for investments up to $560 million (Rs 2,750 crore).

The realtor is also in negotiations with banks to restructure an additional Rs 500 crore of loans as part of its plan to cut debt and secure funding to complete existing projects.

The Gurgaon-based realty firm, whose stock is now trading at less than a tenth of its 52-week peak on the Bombay Stock Exchange (BSE), plans to draw down $110 million (Rs 540 crore) from Unitech Real Estate International Fund to invest in its realty projects in the National Capital Region (NCR). When contacted, the company declined to comment on the development.

Last year, Unitech received commitments of $330 million (Rs 1,620 crore) for its international fund, which was launched exclusively to raise money to invest in the company’s residential projects.

The realty major is also in talks with PE funds to raise $300 million (Rs 1,480 crore) at the corporate level and as much as $150 million (Rs 740 crore) for specific residential projects being developed in Hyderabad and Kolkata. While the company expects to tie up PE funding for its Hyderabad and Kolkata projects, being developed through special purpose vehicles (SPVs), by the end of March 2009, PE funding at corporate level is expected only after the fortunes of the market turn for the better.

Unitech has admitted that it has a debt of Rs 8,000 crore on its balance sheet, of which it has to repay Rs 2,500 crore by March 2009.

Of the Rs 2,500 crore, the developer has already restructured Rs 1,000 crore of loans with banks and is in talks to restructure an additional Rs 500 crore. It expects to complete the process by the end of this month.

For the balance Rs 1,000 crore. The company is in talks to sell its Gurgaon-based hotel project and also the project in the national Capital’s Saket area to meet the remaining Rs 1,000 crore. However, a report by CLSA said Unitech needed to repay Rs 1,000 crore of debt to mutual funds this quarter, indicating trouble for the company. Unlike banks, where it has the option of restructuring loans, the debt owed to mutual funds will have to be repaid by this quarter, the CLSA report said. However, Unitech has disputed the report, saying the company did not owe debt to mutual funds.

SEZ In Gurgaon By Raheja Developers

admin — Tue, 26 Aug 2008 10:55:40 +0000

Realty firm Raheja Developers said it would invest about four thousan five hundred crore rupees to develop an engineering SEZ in Gurgaon over the next three to five years.
This project, which is expected to create job opportunities for around fifty thousand people (including both direct and indirect) is said to have a potential to generate yearly exports of one thousand crore rupees.
According to Navin M Raheja Raheja Developers Chairman “This is the first notified engineering Special Economic Zone (SEZ) in the northern India. The project cost to develop this two hundred fifty five acre SEZ is about four thousand five hundred crore rupees,”.
The investment would be funded through a mix of debt, equity and internal accruals, he said. “We are also looking at the strategic investors,” Mr Raheja added.
Informing on the land acquisition process Raheja informed that out of the total two hundred fifty five acre, about sixty per cent has been purchased while in the rest of the forty per cent the company has entered into partnership with landowners.
“We are going with the willing partnership of the farmers by paying them competitive prices for their lands. Incase the farmers are still reluctant to sell their lands, we have an option where the landowner can give his land on lease and in return can expect an income of around Rs 2-5 lakh per month, which is much higher with respect to what a farmer would normally earn on an equal stretch of land,” Raheja said.
When asked to comment on the amount of pressure, the growing number of SEZs will put on the limited agricultural land, Mr Raheja asserted that it is not SEZs, but low productivity of agricultural produce, that is an obstacle in the country’s pursuit of producing sufficient food grains.
Raheja, explaining on their SEZ project, said, the first phase of the project that involves the notified two hundred fifty five acre would be completed over the next 3-5 years. The company plans to expand the size of SEZ project and is in talks with landowners.

Sunil Mantri To Develop Township

Thu, 31 Jul 2008 10:48:00 +0000

Real estate firm Sunil Mantri said that it will invest Rs 2,000 crore on developing a 2,000-acre residential project in Gwalior over the next decade.

The company signed an MoU with the Special Area Development Authority, Gwalior, to carry out the project under public-private-partnership model, the company said in a statement.

As per the MoU, the realty firm would set up a Hi Tech city over an area of 2,000 acres, comprising 25,000 housing units.

The company has already acquired 375 acres for creating housing for the low and mid-income people.

Around 5,000 houses would be provided in this project and the developments work would be commissioned by October this year.

It is currently developing three new projects in Gwalior, consisting of residential, a shopping mall cum multiplex and commercial spaces.

Ansal Properties and Infrastructure Ltd To Rs 900 Crore In Sonepat

admin — Mon, 28 Jul 2008 13:59:14 +0000

Leading realty developer Ansal Properties & Infrastructure Ltd said it will invest Rs 900 crore for developing a 250-acre engineering-based Special Economic Zone at Sonepat in Haryana.

“We are happy that Ansal API will fill up a long pending demand for space in the fast developing area of Sonepat. The notification of the SEZ has come at an appropriate time when the manufacturing sector has been looking at new avenues of growth,” Ansal API Chairman Sushil Ansal said.

The SEZ would generate employment opportunity and create export option for the national economy, he added.

The project would come up on the Amritsar-New Delhi Grand Trunk Road and would be developed through company’s subsidiary Ansal Kamdhenu Engineering SEZ, the realty firm said in the statement.

“Given the demand for Indian engineering products in the developed and developing economies, the existing units are looking at options to expand and new units plan to set up here,” the statement said.

The SEZ would have prescribed processing and non-processing zones, where the non-processing zone would include residential complexes, while the processing zone would house manufacturing and engineering set ups across all industry domain.

PE Fund Picks 40% In Amrapali SPV

Mon, 28 Jul 2008 13:56:40 +0000

Private equity fund SUN-Apollo Ventures has invested Rs 300 crore for 35-40% equity in an SPV of Noida-based realty firm Amrapali group.

SUN-Apollo is a joint venture between Delhi-based Khemka family’s SUN group and US-based private equity fund Apollo Real Estate Advisors. Apollo’s development and investment portfolio is spread across US, UK, Russia and other European countries, besides India. SUN Group, which has interests in oil & gas, mining, real estate, infrastructure, food & beverage and technology, has been active in India, Russia and other emerging markets.

Amrapali group chairman Anil Sharma said, “The SPV will develop a 200-acre township in Jaipur and a 15-acre high-end housing project in Noida. Both projects are likely to be completed in two-and-a-half years”. The Jaipur Township will have housing, retail, commercial and IT space. Amrapali group, which has developed six urban residential colonies in the national capital region, is at present executing real estate projects worth Rs 8,000 crore in several cities.

The SUN-Apollo fund infusion is the latest in the series of PE funding in the Indian real estate despite a slowdown. Many PE funds had raised funds when the going was good for the realty sector as well as the financial markets. SUN-Apollo had closed a $630-million fund last year.

Therefore, the PE infusions in Indian realty are mostly the deployment of funds raised earlier. But now with credit crisis gripping the globe, fund raising has considerably slowed. Meanwhile, demand has slowed down and bank credit is largely unavailable to realty firms, forcing them to seek cash from PE players at a not so favourable term. Real estate players are said to be settling for a project valuation of 30-40% less than what they could have got a year ago.

Cash crunch has forced several real estate ty players to focus on executing existing projects, rather than expand into new areas. Some, however, are still exploring new themes. Amrapali group is foraying into hospitality with a 230-room hotel in Greater Noida.

Indian Realty Need Chinese Rules

admin — Thu, 24 Jul 2008 11:47:35 +0000

It’s now quite evident that real estate companies are in for some difficult times. CRISIL not only foresees a delay in many planned and ongoing projects, it believes several players are over-leveraged and that the combination of sluggish demand and rising costs will lead to a shakeout. In particular, residential complexes, funded largely by customer advances, have been severely hit by the slowdown in bookings, which means it will be a while before the projects are completed. So it’s going to be a long and painful wait for buyers who have paid up. Much of this pain could perhaps have been avoided if the government kept an eye on builders and subjected them to more scrutiny. Indian laws, it would appear, are far too lenient. In China, for instance, developers can pre-sell a residential property only when one-third or two-thirds of the construction is complete, depending on which province they’re in. It’s a far easier world out here where builders are free to pre-sell property even before they’ve started digging. Those who want to own a home of their own, and who doesn’t, often have little choice but to play along. Buyers also have very little idea about how their hard-earned money is being utilized by the developer. In China, we’re told, mortgage payments have to be utilised for a specific project. Maybe that’s the way it should be done here too; builders would then not be able to divert customer advances for other purposes. Because that’s precisely what some of them appear to have been doing. Overly ambitious developers have bid for land banks and are now scrambling for the money to settle the bills. Unless things take a turn for the better, these developers will probably not have the financial wherewithal to start building even if they get possession of the land. And neither will they be penalized for this. In China, a realty firm must develop the land acquired within a certain time frame, failing which the appreciation in the value of the land is taxed. Back home that’s not the case, so there’s really no hurry to start any construction, the land can simply lie vacant. It’s a pity that this can happen in a country where there are so few houses and so many more people waiting for a home of their own.
Chinese developers hold relatively small land banks; brokerage CLSA estimates it would be sufficient for development over a 4-10 year period, depending on growth targets; in India developers are estimated to be holding on to land banks for anywhere between 8 and 15 years. To be fair, approvals in India do take much longer than they do in China because much of the land is agricultural land. But even then, companies appear to be in a hurry to pick up property. Given that there’s a downturn in the offing, they might just end up owing a lot of inventory at a time when prices are coming off. Most Indian property players are already so highly leveraged that few would be able to cash in on falling prices. The difference in the amount of debt that Indian and Chinese players have on their books is striking. The average gearing for listed Chinese developers, CLSA reckons, is 50-60% with only a couple of them at 100%. For companies back home, the average would be closer to 100% with a couple of firms indulging themselves beyond that. What’s more, some of them are not able to recover their money in time; receivables for Parsvanath rose by about 20% sequentially in the March 2008 quarter. The higher cost of money means the debt will continue to pile up.
As it is, it’s not easy to tell what kind of shape the finances of property firms are in. That’s because the percentage-of-completion method followed by companies means that sales and profits and recognized well before the entire project is completed. That just won’t do in China; revenues there flow into the books only after the project has been completed and the property handed over to the buyers. In that sense, investors in property stocks may want to note, Indian firms would seem to be less transparent than their Chinese peers.
That’s possibly because they can get away with it. As CLSA notes, in India property developers are “friends” of policy makers in India. On the contrary in China, while they may enjoy similar good relations with the provincial governments, the central government has been seen to be taking aggressive steps against the sector. Conditions in the real estate space in China today are pretty similar to those in India. Property markets there too have weakened and buyers are biding their time. A big difference, however, is that property prices in China are still considered affordable whereas back home even a modest home remains out of reach. That’s the main reason why there have been so few transactions. It’s time we changed some of the rules, home buyers deserve better.

Omaxe Annual Business Report

admin — Tue, 27 May 2008 09:54:25 +0000

Realty firm Omaxe on 26th may reported consolidate net profit of around four hundred ninety five crore rupees for the year ended 31 Mar 08, a more than two-fold jump over the preceding year.
The company had recorded a consolidated net profit of around two hundred forty four crore rupees in the earlier fiscal, Omaxe said in a statement.
The consolidated revenue rose by 60.26 % at Rs 2,307.75 crore in 2007-08 following solid demand in the property market, it said.
The company also pronounced a dividend of 25 % on equity shares for the FY ended 31 Mar 08.