Golden Gate Properties Ltd, a Bangalore-based mid-tier real estate developer, is exploring sale of shares in some of its assets (projects and land parcels) to retire debts.
The developer, in which Deutsche Bank arm is invested, is looking at raising anywhere between Rs 150 crore and Rs 200 crore in cash as it looks to repay a debt instrument from Citigroup. It is believed that Citigroup, whose exposure in the company is closer to Rs 150 crore, wants to recoup the capital as part of a liquidation drive of the special situations portfolio.
RREEF Alternative Investments, the global alternative investment management business of Deutsche Bank, invested $70m million for an undisclosed stake in the company in 2007. Citi followed suit when the developer unveiled ambitious affordable housing projects in Bangalore and Hyderabad. However, despite the high-decibel promotional campaign, its affordable housing brand ‘Commune’ made a very slow start in Bangalore upsetting its future plans in this segment.
Golden Gate Properties is now seeking buyers for its land parcels in the city's outskirts besides being open to share sale in some of its upcoming luxury residential projects.
Sources told VCCircle that Golden Gate has put two land parcels on Sarjapur Road (close to Bangalore’s IT corridor) on the block. One of this is a 23-acre land holding which could fetch around Rs 100 crore, if it finds takers. Golden Gate has also explored share sale in some of its residential projects, including the luxury venture Golden Grant, which is nearing completion.
A source, directly familiar with the situation, said, the developer was open to an outright sale or joint venture deals across land parcels as well as in ongoing projects. Its recent discussions with potential buyers like Assetz Property, a specialist in property development services and investments, and UBS-Raheja real estate fund did not go through, with a company source confirming that talks were now on with new investors.
When contacted, Sanjay Raj, Executive Director, Golden Gate, said, the company was in the market to raise equity. “This will be jointly done by Deutsche Bank and Golden Gate, and we continue to enjoy the support of Citi,” he said. The real estate firm has a portfolio of 10 developed properties, mostly residential, in the neighbourhoods of Bangalore and Hyderabad.
In 2008, the company said, it was developing an inventory of 22,000 units with 23 million sq ft area across nine projects. Meanwhile, Golden Grant is expected to see the handover in July this year but with a reduced inventory of around 325 units, less than half of what was initially planned.