Nitesh Estates Ltd, the last IPO-ed real estate developer, is closing joint development deals for high-rise luxury residential projects in Bangalore's central business district (CBD) that may be generating at least Rs 100 crore in revenue and upwards of Rs 50 crore in profits starting FY12.

The developer, which completed Rs 405 crore public offering in May this year, is buying back a part of Citigroup's stake in a special purpose vehicle developing India's first Ritz Carlton Hotel signaling its intent to get back majority stake in the project going forward, sources directly familiar with the development said.

Citigroup Property Investors, which is selling the investment portfolio to global private equity Apollo Management, holds 74% stake in the 281-room Ritz Carlton project, with Nitesh Estates keeping the rest. Sources said, the developer was hiking its stake to 40% - buying back 14% at par - even as Citi's sale to Apollo is being formalized. Nitesh would be buying back a part of the stake at enterprise valuation of Rs 240 crore, which happens to be the initial project valuation. Apollo will take control of the remaining 60% stake from Citigroup shortly.

The 16-storeyed Ritz Carlton, with an estimated project cost of Rs 700 crore, will have luxury retail space, convention hall and branded restaurants. "Nitesh Estates is hoping to buy back majority stake in the SPV within 3-5 years and the latest development is a step in that direction," explained a banking source. The hotel venture could be carrying valuation of around Rs 1,000 crore upon completion in late 2011.

A second source said, Nitesh has clinched a deal to jointly develop 1.5 lakh sqft of residential units on Aga Abbas Ali Road in Ulsoor, near the city's arterial MG Road, in which the company will have 45% economic interest. The deal for developing 1.4 sq ft of luxury residential space in a high-rise construction one acre plot held by the Bible Society of India, which will hold 55% economic interest in the development.

"The company is hoping for Rs 100 crore revenue and bottomline revenue of Rs 25-30 crore from this project. And this could start coming in from early FY12," the source, who did not wish to be named, added.

The developer is also in the reckoning for joint development rights on a two-acre land being auctioned on Cunningham Road with development potential of up to 3 lakh sq ft. Both these developments could fetch sale value upwards of Rs 20,000 per sq ft when developed, source added. Nitesh Estates pipped bids from other developers like Prestige Group for the Aga Abbas Ali Road development rights, while Ajay Piramal-backed Indiareit and a few other developers are also vying for the Cunningham Road property.

Nitesh Estates confirmed the development right on Aga Abbas Ali road project, but declined to comment on speculation regarding other development rights as well as on stake buyback in the Ritz Carlton Hotel SPV.

Nitesh along with Prestige and Brigade Enterprises are the the only developers now with access to fairly large CBD residential developments in Bangalore. The latest global real estate trends are reporting renewed interest in high-rise city-centre residential projects across top metros worldwide. Last month, Lodha Developers unveiled the world's tallest residential tower with 117 storeys in South Mumbai.

Nitesh Estates, which had projected sales of around 1,000 residential apartments in the current fiscal, have sold 350 units in the first quarter, a company official said. The company's plans to launch 7-8 new projects this year is on track. For FY11, Nitesh Estates Ltd's turnover projection stands at Rs 175-200 crore with net profit of Rs 25 crore.

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