Unitech Arranged Three Hundred Million Dollar For Residential Projects

Unitech International Real Estate Fund is learnt to have raised $300 mn which will be deployed in Unitech’s residential projects. The new fund will help the country’s second-largest, listed developer tide over the liquidity crunch dogging almost all real estate firms.

A senior Unitech executive, who didn’t wish to be named, told that an European pension fund, a Japanese bank and some Europe-based HNIs have invested in the Unitech fund. Unitech International Real Estate Fund is an independent fund launched by Unitech on the lines of Unitech Corporate Park (UCP). It is an AIM-listed entity which owns Unitech’s IT parks.

Unitech’s asset management arm, Unitech Realty Advisors, will advise on the deployment of fund, which has a horizon of 10 years. The entire corpus of $300 mn will be deployed in Unitech’s residential projects spread across the country in the next few months.

The real estate sector is facing a tough time, with residential segment being the worst hit. Housing sales have declined by up to 80% in most markets across the country leading to a major cash crunch for developers.

Residential projects in India generally work on the self-finance model, with home buyers making payment in advance for the houses to be delivered usually three years later. But with fewer home buyers in the market, several developers are stuck with projects, raising the probability of late deliveries. A sluggish demand and the rising cost of capital and construction have forced investors to shun real estate on Dalal Street too. The shares of realty firms have been in a free-float mode, touching all time-lows, in most cases.

Unitech’s scrip touched a 52-week low of Rs 135.10 on BSE on 16th July before closing at Rs 137, down 11% from the previous close. Unitech has lost almost 75% off its January peak. Country’s largest realty developer, DLF, is faring no better. The company was prompted to announce a buyback of its shares after its scrip plunged to Rs 350 on July 2, a decline of 71% this year.

Analysts have been routinely downgrading real estate sector, given the rising inflation and interest rates and sluggish demand. Credit Suisse cut its rating for DLF from ‘neutral’ to ‘under perform’ and Unitech’s to ‘neutral’.

2 Comments

  1. S Malhotra
    Posted July 20, 2008 at 7:51 am | Permalink

    Dear Sir,

    The following clippings were seen lately on the AOL channel with regard to India’s property developer Unitech Ltd’s and their involvement in land dealings at Bangalore in Karnataka.

    1. http://in.youtube.com/watch?v=B07mGFFGRYU

    2. http://in.youtube.com/watch?v=jjDtJjA96Dg

    Your views and comments would be appreciated on the above.

    Thanking you,

    Yours faithfully,

    S. Malhotra.

  2. Posted July 24, 2008 at 4:18 am | Permalink

    Real estate major Unitech Ltd is in final stages of negotiation with Lehman for a $500-million PE investment in its two commercial projects in Mumbai. The two sides have signed a non-disclosure agreement. According to sources, the investment may come into two SPVs floated by Unitech for the projects in Santa Cruz, and Lehman could pick up stake in the SPVs. Unitech is planning to sharpen its focus in the Mumbai market over the new two years. Unitech already has a land bank of 350 acres in Mumbai and in next two years the financial hub is expected to contribute more revenue for the company than the National Capital Region.Both the Mumbai projects would have a combined developable office space of 2 million sq ft in the initial phase.For more view- realtydigest.blogspot.com

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