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Lodha Developers bets on commercial leased assets for future growth



Lodha Developments

Lodha Developers is shifting its commercial real estate business model to “build and lease” rather than outright sale of properties.

Mumbai: After building a sizeable residential portfolio, India’s largest realty firm in terms of sales, Lodha Developers Pvt. Ltd, is looking at commercial real estate for its next level of growth. The firm is planning to build around 9 million sq. ft of office space, 1 million sq. ft of retail space and a warehousing and logistics park in Mumbai on 150 acres with an investment of nearly Rs2,500 crores in the next five years.

With these plans, the Mumbai-based real estate firm is also shifting its commercial real estate business model for the first time to “build and lease” rather than outright sale of the properties as it looks to develop a substantial commercial lease portfolio that could later be monetized either through a REIT (real estate investment trust) listing or sales to investors.

“We will now aggressively ramp up our commercial asset business. Our plan is to have nine million square ft of office space under our management… This is part of our larger aspiration of creating a (commercial) business valuation of $1 billion by 2021,” Shaishav Dharia, regional chief executive officer, Lodha Group told Mint.

He said work has begun on three commercial projects that have a potential development area of 2.5 million sq. ft. The firm is also in the process of building a 150-acre industrial logistics park as part of its mixed used development project—Palava City—in Mumbai.

“We as a group already have 480 million sq. ft of developable land. All of this is in the Mumbai Metropolitan Region (MMR) and already paid for. When you have such a big land parcel, it creates another opportunity for us, particularly in terms of having large mixed development in our portfolio,” Dharia said.

The firm is in the process of building two commercial towers with around 700,000 sq. ft of space over 87 acres of land at Kolshet in Thane. It had bought the land parcel in 2014 from Clariant Chemicals for Rs1,154 crores. Within the Palava mixed-use development, Lodha has also chalked out plans to start construction of office buildings with 700,000 sq. ft of space in the next two to three months.

Besides, the firm expects to deliver another 900,000 sq. ft of office buildings by 2018 that are currently being developed as part of the New Cuffe Parade project, a mixed use development at Wadala in Mumbai.

“So around 2.3 million sq. ft of commercial space will be off the ground in the next two to three months,” Dharia said.

He said building these assets would require an annual investment of around Rs500 crore for the next five years. This would mainly be funded through internal accruals.

Lodha’s plan to ramp up its commercial real estate is part of the larger plan to own substantial leased assets in the next five years. So far, the company’s only source of rental revenue is a mall at Palava which was delivered in September last year.

Though it has developed around 5 million sq. ft of office space in the last five years, it has only followed the “build and sell” model.

“Going forward, the business plan is not to sell commercial assets. We will basically be owning it and it will purely be on a leased model only,” Dharia said, adding that the growing interest for REITs has made commercial real estate an attractive business opportunity for many builders.

The slump in the residential market has had no effect on the demand for commercial real estate, which has continued to pick up on the back of interest shown from information technology (IT) and IT-enabled firms, banks and e-commerce companies.

According to property consultant CBRE, office space uptake grew by 9% in 2016, touching an all-time high of 43 million sq. ft across major cities in the country. Meanwhile, new supply declined by 12% to about 35 million sq. ft.

“There has been a surge in demand for leased assets whether it is offices or retail. It has consistently picked up since 2015. But there is a supply crunch in new grade A office right now. This definitely creates an opportunity for us,” Dharia said.

Source: Live Mint

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Indiabulls Real Estate Acquires A Commercial Building With Leasable Area Of 2.5 Lakh Sq Ft. In Gurgaon



Indiabulls Real Estate

Indiabulls Real Estate has earned a distinct reputation for building projects that turn spaces into inspiring places, since its inception. Indiabulls Real Estate went on to expand its projects portfolio, with its prime focus on construction and development of residential, commercial & SEZ projects, across major Indian Metro cities. Today Indiabulls Real Estate is ranked amongst the top Real Estate companies with a total Gross Development value of INR 32,189 crores and net worth of INR 5,480 crores as of 2017.

Indiabulls Real Estate has commercial development with a leasable area of 3.15 million sq.ft. under construction. Further, it has a land bank of 1,046 acres and also possesses 2,588 acres of SEZ land at Nasik, Maharashtra. In 2014, the company acquired the prime property, 22 Hanover Square in Central London for Rs.1630 Cr. The group has also been conferred the status of a Business Super brand by the brand council Superbrands, India. Indiabulls Real Estate is known for its successful delivering of superior products, services to its customers, partners and shareholders.

Indiabulls Real Estate is planning to acquire a large commercial building with a leasable area of 2.5 lakh sq ft in Gurgaon.

To acquire this large area of prime and newly constructed commercial building, Indiabulls Real Estate’s wholly-owned subsidiary has entered into a definitive and a binding agreement. A BSE filing by the Indiabulls reveals that, the deal has an expectancy period of four months, mainly after receiving the Occupation Certificate of the building. Although the name of the seller and deal value was not disclosed.

With many leading multi-nationals operating in the vicinity, makes it a developed prime commercial location. Equipped with an additional leasable area, the company expects to enhance its annuity revenue to Rs 1,450 crore in FY 20-21 from the rental properties portfolio of Indiabulls Real Estate.

With its expansion spree, Indiabulls Real Estate, is counting on the revival in the real estate market in Gurgaon for making its project a success. The commercial realty market is witnessing a strong demand in Gurgaon. So Indiabulls Real Estate is looking forward to set up a state of the art business park in Gurgaon, which would be able to draw reputed corporates and MNCs. As some big-ticket commercial space rentals and deals are expected to be finalized in this space.

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Adani’s Bandra-Kurla Complex Project To Be Taken Over By Shapoorji Arm For Rs 2,000 Crore



Adani’s Bandra-Kurla Complex Project To Be Taken Over By Shapoorji Arm

Shapoorji Pallonji Investment Advisors which is an investment arm of conglomerate Shapoorji Pallonji Group is set to acquire a commercial project Inspire BKC from Adani Realty in a nearly Rs. 2,000-crore transaction. The project is located in Mumbai’s business district Bandra-Kurla Complex (BKC), informed two persons familiar with the development.

Shapoorji Pallonji Investment Advisors has emerged as the frontrunner from a total seven shortlisted interested entities including US-based private equity major Blackstone Group and an alliance between Qatar Investment Advisors (QIA) and Bengaluru based realty developer RMZ.  For this over 8 lakh sq ft project Shapoorji Pallonji Investment Advisors has already completed the due diligence process.

One of the people mentioned above said, “The due diligence process for the asset has been concluded recently, and currently the final documentation is going on. The deal is expected to be concluded soon as both the parties have frozen the structure of the transaction.”

The project has recently been completed and the developer is in the process of receiving few civic approvals, following which it will be concluded. Adani Realty is also one of the companies that is working on closing few leasing transactions here.

In one such lease deals, Swiss multinational pharmaceutical major Novartis’ India arm has entered into an agreement to pick up over 1lakh sq ft office space in this commercial project. This was one of the largest front office commercial transactions in terms of space in the Mumbai in 2017.

Shapoorji Pallonji Investment Advisor is also kept in the loop on the progress of space leasing transactions in this commercial project.

In its first-ever real estate related engagement in India in October the global insurance and asset management major Allianz Group teamed up with Shapoorji Pallonji Group to create an investment platform for office properties.

The platform, SPREF II, will be a Singapore-domiciled, rupee-denominated and close-ended fund planning to raise $500 million in equity.

After partnering with the Canada Pension Plan Investment Board (CPPIB) in 2013 for a platform with an initial target corpus of $200 million this is Shapoorji Pallonji Investment Advisors’ second such tie-up.

The commercial real estate has been registering a healthy growth across prime office markets in past three years.

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Japyee’s Yamuna Expressway Sees A Bidding By Tata Housing And Lodha



Yamuna Expressway

Jaypee Infratech shares saw a jump of nearly 10 per cent in Monday’s trade after some of the major developers like Tata Housing and the Lodha Group, filed initial bids for the debt-laden realtor and road builder.

These two real estate giant have shown their keenness to own Yamuna Expressway, a project by Jaypee Infratech, the fate of which is now being decided at the Supreme Court. Also the other major participant is the country’s dedicated platform for insolvency resolution, the National Company Law Tribunal (NCLT).

Being the prime concrete road project, Yamuna Expressway starts at the eastern end of Noida-Greater Noida Expressway and runs up to Agra. A toll of slightly more than Rs 2 per kilometre is being charged by the Yamuna Expressway, for every car. An extensive land bank makes the property’s richest attraction, with facilities that are either proposed or already functioning in the immediate vicinity of the access-controlled motorway.

Yamuna Expressway is one such major structure sharing the connectivity with some of the important landmarks in the state. One such architecture is India’s only operational Formula One racing track, located along the expressway. Another influential attraction is the site of the capital region’s second proposed airport, which is closer to the first toll gate from the Greater Noida end. The motorway shares its vicinity with one of the biggest urban campuses of a state-run university. The mega convention centre hosting the annual Auto Expo is also connected to the Yamuna expressway.

In an anticipating decision in regards to a Supreme Court’s ruling, of barring the promoters of Jaypee group from selling or transferring assets, the Reserve Bank of India has ordered banks not to initiate the bankruptcy proceedings against Jaiprakash Associates. Which is the parent group of Jaypee Infratech.

It all started after the IDBI Bank filed to start insolvency proceedings in August against Jaypee Infratech, causing an appeal by homebuyers resulting into the court ruling. The bidding has seen many responses, but eventually all these initial expressions of interest will boil down to a binding offer. Which is a commitment from an interested party to purchase the assets. These bidders, apart from purchasing the assets, are supposed to infuse around Rs 2,000 crore to complete the projects already taken up by Jaypee Infratech.

Earlier in the August, the National Company Law Tribunal (NCLT) Allahabad bench admitted IDBI’s insolvency proceedings against Jaypee Infratech. As Jaypee Group failed to repay its various loans amounting to Rs 526 crore. Anuj Jain has been appointed as the interim resolution professional (IRP) by the NCLT, to carry out proceedings under the Insolvency and Bankruptcy Code. But in September, there came a stay on this process by the Supreme Court, after the appeal by Jaypee Infratech homebuyers.

The company’s saw a total debt of Rs 8,300 crore, with an interest overdue of Rs 1,400 crore on last year’s March. Supreme Court will see a resolution plan from the Jaypee group, in order to ensure a debt restructuring process, enabling the group to meet its obligation.

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