North-based listed realtor Parsvnath Developers Ltd plans to list its retail assets largely housing the properties within Delhi Metro stations through a real estate investment trust (REIT), a top company executive told VCCircle.
Pradeep Jain, chairman, Parsvnath Developers, told VCCircle, “We have close to 2 million sq ft in the Delhi metro corridor related to 12-13 stations and it is a perfect model to list it as an REIT. The final draft is yet to come and once it is through and final regulations are out, we would look at a listing.”
Last month market regulator Securities & Exchange Board of India (SEBI) released draft norms to allow REITs in India, which could open up new funding channels for real estate assets in the country. The regulator has, however, said REITs would be allowed only for large assets in its draft note for a separate regulatory framework under SEBI (Real Estate Investment Trusts) Regulations, 2013 (for more on the proposed norms click here).
The developer is not looking at listing its commercial developments as REITs in international exchanges, as a few property owners have done in the past.
Parsvnath has nine metro malls which are located in Azadpur, Akshardham, Inderlok, Kashmere Gate, Pratapnagar, Seelampur, Teeshazari, Metromall Welcome and Netaji Subhash Place stations.
In August this year, Parsvnath had raised Rs 80 crore from a private equity fund for a residential project in Gurgaon. Jain said the firm is not looking at raising further capital from new investors.
Parsvnath had received close to Rs 110 crore from Kotak Realty last year for its Sohna Road project in Gurgaon.
On exits to its existing investors, Jain said, “It is an ongoing process and we have given exit to Sun Apollo Real Estate fund (for a project).”
The developer has completed 47 projects and is currently working on 50 projects with a total area of 76.3 million sq ft. The company’s business portfolio includes residential, commercial (office and retail), DMRC projects, hotels, SEZs and IT parks.
Early this year, the developer had indicated that it was looking to sell off its non-core assets to retire debt.
The shares of the company last traded at Rs 26.50 a unit, down 2.39 per cent on BSE in a weak Mumbai market on Thursday. The developer posted total income of Rs 162 crore during Q2 FY14 against Rs 149 crore in the corresponding quarter last year. On a quarter-on-quarter basis, its total income dropped by 14 per cent from Rs 189 crore in Q1 FY14. Its net profit fell 22 per cent last quarter to Rs 14.25 crore against Rs 18.26 crore in Q2 FY13.
Another developer which is looking to monetise its retail assets is DLF. It plans to launch its pilot commercial mortage-backed securities (CMBS) by early December and is looking to sell stake in two malls DLF Emporio and DLF Promenade in Delhi NCR where it expects to fetch close to Rs 2,000 crore.
(Edited by Joby Puthuparampil Johnson)