Time to exit : Realty Funds

affordable housingBy Dr Sanjay Chaturvedi

Accommodation Times News Services

Realty Funds all started their venture with big names in different segments and different cities in 2009-10 are all wants to restructure their investments. In this process, almost all funds wants to exit ongoing projects. Many have already started in 2014 and others are in process.

Hence, builders are finding it difficult to give them IRR as promised because market is sluggish and nothing is moving. No sale and no market is giving any hope. Rates are likely to slid further in desperateness since pressure to exit by Realty Funds is mounting.

IIFL, the fund has exited its 2012 central Mumbai slum redevelopment project by Sheth Creators (Rs.80 crore), Assotech Ltd’s 2013 plotted development project in Faridabad (Rs.75 crore) and Ruparel Group’s residential development in Mumbai.

Morgan Stanley Real Estate Investing (MSREI), the global real estate investment management arm, which made a number of investments both in projects and in companies in India, has again faced delays in exiting or selling some of them, said a person who didn’t wish to be named. Among the entity level investments, it has partially exited Oberoi Realty Ltd, which went public in 2010. However, it is figuring out an exit route for its 2006-07 investments in Bangalore-based Mantri Developers Pvt. Ltd and Pune’s Panchshil Realty Ltd.

HDFC Portfolio Management Services, part of HDFC Asset Management Company Ltd, which raised a Rs.4,000 crore fund corpus in 2008 and made 25 investments, has exited 15-16 of those and returned around 1.2 times the capital back to investors, said a third person, who also declined to be named.

The realty fund of financial services major IL&FS Investment Managers has exited the phase 1 of developer Wadhwa Group’s residential project, The Address, in the Ghatkopar suburb of Mumbai for Rs 225 crore, according to sources.

Kotak India Real Estate Fund I announced the sale of Peepul Tree Properties Private Limited (Peepul Tree Properties), a wholly-owned undertaking, to Tata Realty Initiatives Fund 1 for an enterprise value of Rs 5,250 million (US$ 117 million). It has also exited from 3C’s IT park in NOIDA.

Milestone Capital Advisor have already exited from 9 projects in Mumbai, Chennai, Jaipur, Hyderabad, Kolkata.

Market is seems to go further in negative correction hence fund advisor wants to exit early with promised IRR. Its time to exit for them.

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