Unitech Corporate Parks (UCP) recently released its audited results for the year. The report has very limited disclosure on how the valuations have been computed. The stated NAV is £1.7408 while the stock is quoting at less 50 p (a discount to NAV of over 70!). Obviously, the market assessment of the valuation is very different from Knight Frank's assumptions.
UCP also released a leasing update that indicates the company has been able to lease 11.9% of total leasable area (across all planned projects). Considering the broadbased slowdown in the economy and the huge supply of office space coming on stream, we expect the run-rate for leasing to be much lower going forward.
Saturday, August 2, 2008
Earnings Season Nuggets....
As we come to the close of Q1 earnings, a couple of interesting nuggets caught my eye
- DLF continues to sell a large chunk of its assets to DLF Assets. DLF Assets currently owes DLF Rs. 3,383 crores. To put things in context, so far DLF assets worth Rs. 9000 crores to DLF Assets. Of the Rs. 5,700 crores paid out by DLF assets, Rs. 4,900 crores seems to come from private equity investors. Interestingly, the last tranche of about Rs. 2,000 crores was in the form of convertible preference shares with ultimate conversion price tied to the listing price of the DLF Office Trust in Singapore. Given that Indiabulls Property Trust is trading at a 30% discount to issue price, less than 2 months after issue, the prospects for DLF Assets look daunting to say the least.
- Sobha Developers has changed its revenue recognition policy. Now, revenues from the land component will be recognized when EITHER 20% of dues from customer are collected or agreement for sale is executed. So, for properties where the land cost forms a large fraction of total price, recognized revenues could be greater than the actual cash received.
Monday, July 28, 2008
Indian real estate market catches the attention of Donald Trump
According to this report, Donald Trump Jr, son of the real estate tycoon, is planning to set up a $1 billion real estate fund with focus on India. New York based Trump. His company, New York based Trump Organisation is also looking to set up residential and hotel projects in Mumbai, in cooperation with an Indian partner.
Interesting that his focus for this real estate investment is Mumbai, where valuations have been rather stretched, property prices underwent a recent correction and more is expected with more land being released from archaic bureaucratic control in order to counter the land-crunch.
Interesting that his focus for this real estate investment is Mumbai, where valuations have been rather stretched, property prices underwent a recent correction and more is expected with more land being released from archaic bureaucratic control in order to counter the land-crunch.
SUN-Apollo Ventures invests $70 million in Amrapali SPV
SUN-Apollo Ventures, the JV between Delhi based SUN group and US based PE fund Apollo Real Estate advisors, has picked a 35-40% equity stake in an SPV of Noida based realty firm Amrapali group. The funds will be used to develop a 200 acre township in Jaipur and a 15 acre project in Noida. The Jaipur project includes housing, retail and commercial development.
Amrapali group has developed six residential colonies around Delhi and current value of on-going projects is pegged at $1.9 billion.
Amrapali group has developed six residential colonies around Delhi and current value of on-going projects is pegged at $1.9 billion.
Friday, July 18, 2008
BPTP Ltd. continues to be a favorite with multi-national banks!
JP Morgan made its entry into the Indian real estate market, through a $60 million (3%) equity stake in BPTP Ltd. This continues the dream run for the Faridabad based developer, following Citigroup's and Merrill's investment in the firm.
Citi Property Investments, realty arm of Citigroup, picked up a $80 million (5.8%) equity stake last year. They also recently plegded $160 million towards four SEZs being developed by BPTP in Noida, Gurgaon and Faridabad. Merrill Lynch made a $28 million investment in IT park being developed in Gurgaon by a BPTP subsidiary.
BPTP currently has 65 residential, commercial, IT parks and SEZ projects. They also made news for picking up the largest ever land deal of 95 acres in Noida for $1.2 billion. In their success, they outbid bigger developers such as DLF and Omaxe. The company has so far paid $222 million towards the Noida deal. The latest round of funding, from Citi and JP, is expected to help pay the installments for this deal.
BPTP plans to build a world class business center here including 45.22 million sq ft of offices, 2.5 million sq ft of retail, and 1 million sq ft of hotels and serviced apartments, in three phases, over a decade. Construction costs are estimated at about $1 billion for this project. BPTP is currently looking for funding from PE sources also. The company expects to cash in from the location of the land and its proximity to Delhi's wealthy suburbs and attract tenancy from banks and law firms.
We will continue to track the developer as well the project.
Citi Property Investments, realty arm of Citigroup, picked up a $80 million (5.8%) equity stake last year. They also recently plegded $160 million towards four SEZs being developed by BPTP in Noida, Gurgaon and Faridabad. Merrill Lynch made a $28 million investment in IT park being developed in Gurgaon by a BPTP subsidiary.
BPTP currently has 65 residential, commercial, IT parks and SEZ projects. They also made news for picking up the largest ever land deal of 95 acres in Noida for $1.2 billion. In their success, they outbid bigger developers such as DLF and Omaxe. The company has so far paid $222 million towards the Noida deal. The latest round of funding, from Citi and JP, is expected to help pay the installments for this deal.
BPTP plans to build a world class business center here including 45.22 million sq ft of offices, 2.5 million sq ft of retail, and 1 million sq ft of hotels and serviced apartments, in three phases, over a decade. Construction costs are estimated at about $1 billion for this project. BPTP is currently looking for funding from PE sources also. The company expects to cash in from the location of the land and its proximity to Delhi's wealthy suburbs and attract tenancy from banks and law firms.
We will continue to track the developer as well the project.
Thursday, July 17, 2008
Alpha Investment Partners raises $1.6 billion for a new fund focussed on Asian real estate
Singapore's third-largest developer, Keppel Land's property management unit, Alpha Investment Partners Ltd (AIP), recently raised $1.6 billion for a new fund that will focus on real estate in Asia. The amount is not only $300 million more than its own target, it is also the largest ever raised by AIP since its inception in 2003.
The funds were raised from 15 institutional investors, including European pension funds and banks as well as sovereign wealth funds. With this new addition, AIP will now have $5.2 billion of assets under management. The success of this fund raising shows the confidence that investors have in AIP's management which is in line with their performance in other funds.
AIP raised $243 million, in 2003, for Asia No. 1 Property Fund with a target of 20% IRR. As of March 2008 they had returned 27% and have begun to return capital to the investors. Alpha Core Plus Real Estate Fund was set up in 2004 with $435 million and a target IRR of 12% -13%. The achieved return was an annualised 40 per cent as at March 2008.
The latest fund, Alpha Asia Macro Trends Fund, has a targeted return of 16 % to 18%. They are looking to invest in real estate in Singapore, Japan, Taiwan, South Korea and Hong Kong, and the emerging markets of China, India and Vietnam.
We had commented earlier that funds flush with money are looking to Asian real estate for investment as the western markets continue to remain in flux. This new fund is testament that there is still appetite amongst blue-chip investors to back funds with strong track records.
The funds were raised from 15 institutional investors, including European pension funds and banks as well as sovereign wealth funds. With this new addition, AIP will now have $5.2 billion of assets under management. The success of this fund raising shows the confidence that investors have in AIP's management which is in line with their performance in other funds.
AIP raised $243 million, in 2003, for Asia No. 1 Property Fund with a target of 20% IRR. As of March 2008 they had returned 27% and have begun to return capital to the investors. Alpha Core Plus Real Estate Fund was set up in 2004 with $435 million and a target IRR of 12% -13%. The achieved return was an annualised 40 per cent as at March 2008.
The latest fund, Alpha Asia Macro Trends Fund, has a targeted return of 16 % to 18%. They are looking to invest in real estate in Singapore, Japan, Taiwan, South Korea and Hong Kong, and the emerging markets of China, India and Vietnam.
We had commented earlier that funds flush with money are looking to Asian real estate for investment as the western markets continue to remain in flux. This new fund is testament that there is still appetite amongst blue-chip investors to back funds with strong track records.
Unitech raises $300 million to tide liquidity crunch
In an expected move, Unitech International Real Estate Fund has raised $300 million to fund Unitech Ltd.'s residential projects. The investors are supposed to be Japanese banks and European HNIs.
This latest move is in line with the trend we had commented on earlier in this blog. The downside risks in the property market have resulted in downgrades for many of these developers, including United, making raising funds in domestic markets too expensive. Developers are now looking outside of the country to raise funds for projects that they have already committed to.
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