Recovery in the real estate sector is making way for private equity exits in this space. Kotak Realty Funds Group (KRFG), the real estate private equity arm of Kotak Bank, is planning complete exits from two of its IT Park investments in Mumbai and Delhi.
KRFG is in talks with various investors to make an exit from Peepal Tree Properties, a green field IT park building in Goregaon, Mumbai and Green Boulevard, a project in Noida IT Park. The deals are expected to be signed this year, according to Sriniwasan, CEO, Kotak Realty Fund.
Last week, KRFG acquired 28% stake in Chennai-based integrated township project-Aavisa for Rs 270 crore and invested Rs 250 crore in two projects of Emaar MGF early this month.
The fund has fully exited from investments in Phoenix Mills and NDR Warehousing Private Limited while a partial exit has been made from its recent investment in Dheeraj Insignia, a Mumbai-based residential project launched by Dheeraj Realty. The fund has invested about Rs 150 crore in April 2010.
Speaking to VCCircle, S. Sriniwasan, Chief Executive Officer, Kotak Realty Fund, said, “Market has come back after the recession and we could see correction in prices in a few major cities. The increasing demand for both commercial as well as residential projects in metros and tier I cities boosts our exit plans.” Though there is an oversupply in commercial projects right now, it will slowly come back in over the 24 months when it (oversupply) will get absorbed, he added.
Kotak India Real Estate Fund I (KIREF-I ) had purchased the 7,85,000-sq ft green field IT park building in Mumbai, developed by K. Raheja Constructions in mid 2006, for about Rs 200 crore. Approximately 98% of the building, which commenced operations in August 2008, has been leased out to major companies like Accenture, BNP, Mphasis and Tata AIG.
KIREF-I had invested about Rs 38 crore with Noida-based developer-3C Group to develop Green Boulevard, a 700,000 sq ft IT/ITES space project. Early this month, Kotak Real Estate fund announced plans of Rs 85-crore investment in 3C Company’s new Noida-based residential project-Lotus Zing. KRFG expects a return of 30% from the proposed exits.
Kotak Realty manages three funds-Kotak India Real Estate Fund I, a Rs 458-crore which had been fully invested; Kotak Alternate Opportunities India Fund, a Rs 1578-crore fund and Kotak India Realty Fund Limited, $281 million offshore fund.
KRFG has invested project-level investments in distressed asset property (land) in Chennai, Golf Community in Bangalore, mid-income housing in Hyderabad, a Chennai-based residential township, while it has enterprise level investments in Lemon Tree Hotels, Pride Hotels Limited, Sobha Developers, Lalith Gangadhar Constructions Pvt. Ltd and Sunteck Realty Limited.
Earlier, VCCircle had reported on plans of Indiareit Fund Advisors, promoted by the Piramal Group, to make five partial exits this year from its large portfolio of residential projects. Indiareit plans to exit from Neptune Enterprise, through its IPO, and other projects such as Skyline (Bangalore), Samira (Mumbai) and SSPDL Northwood (Hyderabad) this year. It had partially exited from Aristo (Mumbai) in April.
