The New Delhi office of Hines, the international real estate firm, and DLF Ltd., India’s largest real estate company, announced today the signing of a Memorandum of Understanding (MoU) to form a venture to master plan and develop a site of 15 acres located on Golf Course Road in Gurgaon, India. The site is located directly across from the DLF Golf Course and its residential community known as DLF Golf Links.
Hines and DLF also announced the selection of the internationally renowned firm Robert A. M. Stern Architects, which will develop a master plan for the entire site as well as design the first phase of the complex, a major 30-story office tower of approximately 80,000 square meters (860,800 square feet) together with ground-floor retail space and a large parking garage. This is the first project in India for both Hines and Stern. Previously, the firms have collaborated on several projects in the United States, Mexico and Brazil.
In addition to the office tower, the master plan is likely to include high-end retail shops, restaurant and entertainment venues, a hotel, and landscaped exterior and interior public spaces. It may also include serviced apartments and a second office tower. The total mixed-use complex is envisioned to include approximately 235,000 square meters (2.5 million square feet) of construction.
“We are proud that our first development project in India will be in partnership with DLF,” said Daniel MacEachron, managing director of Hines India Real Estate Pvt. Ltd. “Golf Course Road is the premier address in Gurgaon. DLF, Hines and Robert Stern share a vision that this project should be the best-conceived and best-executed project in Northern India.”
“Our goal is to create a truly unique complex,” said Rajiv Singh, DLF’s vice chairman. “Through a combination of exceptional design provided by Bob Stern and his talented team, and the experience Hines brings in the conceptualization and development of major urban mixed-use projects in cities around the world, we feel we are partnering with a world-class combination of talent. When completed, this complex will be the heart of Gurgaon, commercially and as a social-gathering destination.”
“We are extremely enthusiastic to have the opportunity to enter the Indian market with the commission for such a major urban complex,” said Robert Stern.
DLF is the largest and leading real estate development company in India. DLF was established in New Delhi in 1946. In its initial years the company undertook the development of various prestigious South Delhi colonies such as South Extension and Greater Kailash. Today DLF is a major player across India, with presence in 31 cities. DLF’s projects span the entire gamut of real estate development – residential, commercial, retail, hotels, infrastructure and Special Economic Zone (SEZ) developments. With over six decades of experience in real estate, the group has over 220 million square feet of existing development and over 600 million square feet of planned projects.
DLF’s office building division is one of the group’s most admired business lines. With nearly 32 million square feet of developed buildings, as well as ongoing projects, the office sector is a significant contributor to DLF’s rapid rate of growth as an organization. The company has undertaken the development of 22 urban colonies, as well as an entire integrated 3,000-acre township, known as DLF City in Gurgaon. DLF is committed to quality, trust and customer sensitivity, as well as delivering on its promises with agility and financial prudence. In September 2006 DLF was the only real estate firm amongst the 60 businesses named Superbrands of India in the real estate category.
Robert A.M. Stern Architects is a 300-person firm of architects, landscape architects, interior designers and supporting staff. Over its 38-year history, the firm has established an international reputation as a leading design firm with wide experience in residential, commercial and institutional work. Stern is Dean of the Yale School of Architecture. As founder and Senior Partner he personally directs the design of each of the firm's projects. Other senior members of the design team who will be working on the Golf Course Road project include Graham Wyatt, partner, who has been with the firm since 1983 and Meghan McDermott, associate partner, who has been with the firm since 1997.
Hines is a privately owned real estate firm actively engaged in real estate development, investment and property management worldwide, with presence in 15 countries and offices in 96 cities across the globe. The Hines portfolio of projects underway, completed, acquired and managed, includes more than 950 properties representing approximately 380 million square feet. Total assets currently under management are valued at approximately US $16 billion.
FDI-compliant projects in high-end office and residential spaces, mixed-use townships, IT SEZs and large format mixed-use retail, commercial and hospitality projects.
Projects in the National Capital Region, Mumbai, and Bangalore.
Information technology Tata Consultancy Services on Friday said Tata Realty And Infrastructure Ltd (TRIL), engaged in development of real estate and infrastructural facilities, will develop its properties.
TCS have entered into a Memorandum of Understanding (MoU) with TRIL for developing properties for the IT company on land owned or to be owned by it.
The MoU covers eight properties located at Pune, Trivandrum, Kochi, Ahmedabad, Hyderabad, Kolkata, Nagpur and Mangalore about 380 acres acquired or to be acquired by TCS, the company said in a statement to the Bombay Stock Exchange.
Under the MoU, properties would be developed in a phased manner over the next few years. The buildings would be constructed and owned by TRIL (or by Special Purpose Vehicles set up by TRIL) and would be leased to TCS.
TCS and TRIL are both promoted by and subsidiaries of Tata Sons Ltd.
Tata plans to develop excess land owned by various group companies through the recently-floated $1-billion real estate fund under the Tata Realty and Infrastructure. The group believes the exercise will help it “unlock intrinsic value” for the benefit of the shareholders of its various group firms.(Real Estate Intelligence)
Mumbai, India, February 19, 2007 - Leading Indian industrial group Tata is to set up a new company Tata Realty & Infrastructure with a corpus of $1 billion to invest in real estate in the country:INRnews
Tata Realty and Infrastructure, which will make investments in various infrastructure and development projects. The arm is known to have modeled on the lines of Kishore Biyani, promoted Future Group’s Kshitij, says a source familiar with the plan, who did not wish to be identified.
RK Krishna Kumar, Tata Sons director is driving the initiative. Kumar has brought on board Dinesh Chandiok, the former CEO of Ansal Properties to head Tata Realty. KPMG, International Consultancy firm is also making contributions in drawing out the working strategies for the Tata’s real estate business.(Indian Realty News)
Singapore’s Changi Airports International has started work with local partner Tata Realty and Infrastructure Ltd on its search for viable locations for "Merchant Airport".
Merchant airports are expected to allow up to 100% foreign ownership; investors could even be foreign airport companies or airlines.
Merchant airports would cater to domestic and international passenger traffic apart from meeting cargo requirements of industry and retail chains. The policy on greenfield airports allows private developers but the land is to be acquired by the state government.(Aviation India)
Jafza International is the global operations arm of Economic Zones World. Jafza International currently manages seven mega facilities in four countries and has 20 different projects at various stages of development. With the Tata partnership, the company is planning to expand its operations in India.(Real Estate India)
The Tata group may have to rework plans of setting up a special economic zone (SEZ) in Maharashtra, following the Centre’s recent policy intervention. The Tatas were on the verge of finalising its second SEZ at Sinnar near Nashik.(Nashik Real Estate)
Sources in Tata Sons say that the group is in advanced negotiations with a clutch of financial investors like PE funds Carlyle and Warburg Pincus, who are keen to chip in as co-investors. Talks are also in the last leg with Macquarie Bank, Citigroup and a consortium of Japanese banks.(Chennai Real Estate Property)
Bangalore: India's biggest real estate developer DLF, has set its sights on Bangalore. Here it will develop one of its first mid-segment residential ...
DLF issue went through. But like the rival had sworn, not in the form it was originally planned in.
Though company sources would never confirm, DLF had plans to issue shares in the region of Rs 900-1,100, when it first filed DRHP. It eventually issued stock at Rs 525 and reduced the shares on offer.
Did Enam’s absence from DLF IPO, the largest in Indian history, lead to the lackluster performance of the offering? The market believes so.
And there’s more. Enam’s stoic silence in the DLF IPO coinciding with an IPO of one of its own companies was almost a ‘Do-Not-Subscribe’ sign for a large number of stags in the domestic market with whom Enam shares an excellent relationship. :Partha Sinha,TNN
Four years after delisting its shares from the Delhi Stock Exchange, real estate behemoth DLF is knocking at the capital market again selling shares at - hold your breath - 837 times the valuation at (The full version of this story is available to Premium Service subscribers of "Business Standard" only. Worth subscribing.) :N Mahalakshmi
"Basically if you look from a foreign investors' view-point, they want to get into industries which are India-centric; therefore, with the kind of appetite seen in retail, telecom or for that matter infrastructure and real estate, is no different, because if you buy into real estate stocks, or real estate in India, you are basically betting or getting an exposure to the economic growth rates in India. So if you have a good quality and a good proposal and if a good value proposition as DLF is at present, then there will be very good appetite from overseas investors."
"Also, if you notice the kind of private placements in the form of maybe listing in overseas market, or FCCB issues, or the QIP ones, which some of the other real estate companies have done in the recent past, all these issues have got very good response and there is no reason why DLF too should not get a good response, considering that the quality factors in DLF are certainly the highest."
The success of the DLF IPO, which was oversubscribed nearly 3.5 times, should give confidence to merchant bankers and companies that want to raise money in the capital market. DLF has raised Rs 9,000 crore, despite the fact that the issue was considered expensive even optimistic analysts had recommended subscribing at the lower end of the price band.
The story in the much smaller Vishal Retail IPO is even better. With a hot-button business like retail, the issue attracted over-subscription to the extent of 69 times. At the upper end of the price band, the company will collect Rs 129 crore.
Though DLF and its subsidiaries own 1,160 acres, or 11.3%, of the 10,255 acres that comprise the land reserves as of April 30, 2007, DLF directly owns only 0.5% of these land reserves. The balance 10.8% is held by the subsidiaries of DLF. Of the 1,160 acres that DLF own, 38 acres have been leased to DLF by governmental authorities on a long-term basis and DLF has freehold title to the balance.
The remaining land reserves are subject to agreements to purchase, development rights agreements or memoranda of understanding for acquisition.
Second, the real estate market, as we know, is largely "black" - at least in Delhi where DLF is king. Now this "black" money routinely flows out of India through the hawala route, and comes back through FIIs as "participatory notes" - something SEBI and the finance ministry know but cannot curb without allowing a huge crash to happen. The black money of Indian bigwigs has perhaps flowed back into the DLF issue, and some of it could even be the black money in the real estate market.
Why am I not interested in this(DLF) share?
Their "other income" is 1400 cr. which is about 70% of their net profit (1941 cr). I don't like that. Turns out it has come from "disposal of fixed assets and long term investments" - this is a one time thing.
If you remove the one-time other income, the earnings are about 500 cr. which means the company is getting a P/E of 190. I'm not happy to pay such ridiculous valuations in the age of high interest rates, low borrowing capabilities and oversupply.
Land valuations are something I do not understand. How they can value land they do not own is beyond me.
April 04,2007: Doing a U-turn on the DLF IPO case, market regulator SEBI has submitted before the Delhi High Court that it can probe complaints against companies that intend to get listed.
"There is no direct bar (on investigation) in the case of non-listed companies," the SEBI counsel informed the bench headed by Justice Tirath Singh Thakur in response to a query whether there was any direct bar against such probe in the SEBI Act.
Securities and Exchange Board of India, earlier in its affidavit, had said that it cannot investigate complaints made against the real estate major as it was an unlisted company.
It had then said that the Ministry of Company Affairs was the right authority to deal with grievances in case of non- listed companies.
SEBI's U-turn came yesterday during hearing on a PIL by Society for Consumers' Investors and Protection (SCIP), which had sought a probe into DLF's conversion of debentures into equity shares.
The counsel for petitioner B R Schadeva cited the provisions under SEBI Act and Companies Act, which said that SEBI can investigate complaints against those companies which intend to get listed. In this case, DLF had filed red herring prospectus with SEBI, which clearly showed that the company wanted to get listed on the exchange.
December 5,2006: The DLF group’s much-touted IPO will finally see the light of day. The group, which has already resolved the issue with its minority shareholders, is now in the process of filing the draft red herring prospectus (DRHP) with Sebi. Sources in the company told ET, “The DRHP will be filed by December 15 and the issue should hit the market in February.”
The company recently resolved the issue with the shareholders and in it’s extra-ordinary general meeting, the board approved the revival and issue of 81,983 shares, 2% unsecured redeemable debentures of Rs 100 each, which are optionally, fully or partly convertible at par or at premium to the shareholders in accordance with their entitlement.
November 15,2006: DLF Universal, the Delhi-based real estate giant, has resolved the conflict with its minority shareholders, and is now gearing up for its mega IPO. Each minority shareholder will get 440 shares for every single share held. This means minority shareholders have hit pay dirt with the deal. There are many who have become multi-millionaires overnight with this deal. Accoding to a settlement reached at an Extraordinary General Body Meeting on Tuesday, the minority shareholders will be issued 81,983 shares or 2 per cent of unsecured redeemable debentures of Rs 100 each. This would be converted into equity shares in the ratio of 10 equity shares of Rs 10 each.
It would be further split into 5 shares of Rs 2 each. The shareholders also approved a bonus share issue of seven equity shares of Rs 2 each for every share of Rs 2 held after the conversion of the debentures into equity shares and subsequent splitting of shares.
Ultimately, each minority shareholder will now get 440 shares for every single share held. As the terms and conditions remain the same as the previous debenture issue, the minority shareholders will not lose out on the IPO gains.
DLF IPO was derailed as minority shareholders approached the Company Law Board and SEBI alleging that the DLF management took them for a ride when the company held a rights issue in September 2005. Some of the investors were denied participation in the Rs 35 crore rights issue which increased promoters' stake to 99.5 per cent.
With the settlement, DLF IPO is expected anytime soon. The company will first refile its Draft Red Herring Prospectus with SEBI.
This is a lesson for companies who don't value interests of minority shareholders
October 20,2006: Real estate giant DLF Universal has finally settled the issue with its minority investors, a dispute which derailed its much-hyped IPO plans. DLF has convened an extraordinary general meeting on November 14 to approve allotment of the unsubscribed portion of its last year’s rights-cum-debenture issue to minority shareholders. This will make 950-odd minority shareholders millionaires overnight (not that they aren't already).
DLF’s IPO will now sail through without hindrances. It was delayed after minority shareholders complained to the Securities and Exchange Board of India (Sebi), the ministry of company affairs and the Delhi High Court, that DLF management sidestepped them when a rights issue was completed last year.
Now the deal is that a common shareholder with 50 DLF shares will get 20,000 shares of Rs 2 each. Going by the proposed IPO price of a minimum of Rs 600 a share, the shares’ value will be Rs 1.20 crore.
DLF is expected to file a new prospectus with SEBI soon.
September 30,2006: In a major step down from its stated position, India's largest real estate company, DLF Universal, has apologised to its minority shareholders and assured them that steps would be taken to settle the dispute over the rights debentures issue within one month.
In a meeting with minority shareholders today, vice chairman of DLF, Rajiv Singh apologised for not redressing the grievances of minority shareholders earlier and assured them that an advisory committee would be set up to look into the modalities of how the issue could be resolved. Singh reportedly said that the company would ensure that the settlement is in favour of shareholders.
"The company has admitted that it made a mistake and has assured us that our rights would be taken care of. It also said that Sebi and Ministry of Company Affairs (MCA) had enquired about the issue and DLF wants to settle it before venturing into the capital market again," said MS Tanwar who is a minority shareholder with the company.
The company on its part has said that "it will settle a few issues" and then come up with a statement in the next couple of days. It is learnt that today's meeting lasted for less than an hour and was attended by 35-40 minority shareholders.
The meeting was the first overture from the company addressing the claims of its minority shareholders after its IPO was called off last month. While the promoters of the company own 99.5 per cent stake in the entity, there are 1,308 minority share holders who have the residual stake. The controversy had erupted when the company had made a rights issue of partially converted debentures in a 1:1 ratio in December last year. Almost 90 per cent of minority shareholders had cried foul alleging that no intimation about the issue was made to them. The shareholders had written to Sebi alleging breach of trust and the matter is pending before MCA.
However, despite Singh's apology and promises, small shareholders are still suspicious of the company’s motives. "The company did not come with any concrete plan as to how it plans to settle the debenture issue. Instead they made a lot of promises and it all seems to be delaying tactics," said Kamal Bhatia, a shareholder in the company.
When contacted, the company spokesperson confirmed the meeting and said that a statement to the effect will be made during the next two days. The resolution of this issue is important for the company, if it is to revive its IPO.
August 31,2006: DLF gROUP has postponed its much-awaited IPO again. This time the Delhi real estate giant has even withdrawn the draft prospectus from the regulator SEBI. It will resubmit the document again in another month and half. This means DLF is in real soup and the IPO managers or company management did not foresee the shareholder revolt.
"The withdrawal is just for the revision of DHRP. It will be updated with the latest information and an audited report. It is very important to put up the latest information in the interest of the investors," said Saurabh Chawla, Director Finance, DLF.
Background:The company was originally set up as Omaxe Builders Private limited in 1989, promoted by Shri. Rohtas Goel , the founder, to undertake construction & contracting business. The company further changed its constitution to a limited company known as Omaxe Construction Ltd., in 1999. The name of the company has now changed to OMAXE LTD from 2006. The company began life as a civil construction and contracting company, has Successfully executed more than 120 prestigious Industrial, Institutional, Commercial, Residential and Hospital construction projects.
Mumbai, July 17: Real estate developer Omaxe Ltd's initial public offer, expected to raise about Rs 550 cr, got fully subscribed on its first day on Tuesday.
The IPO received bids for 2.57 cr shares against 1.77 cr equity shares on offer, getting subscribed 1.44 times, latest data available on the stock exchanges show.
Omaxe, a real estate player, is open for subscription with a public issue of 1.78 crore equity shares of Rs 10 each with an additional green shoe option of upto 17.50 lakh equity shares in the band of Rs 265 to Rs 310 per share on July 17. The issue will close for subscription on July 20, 2007.
As per calculations, the NPV works out to Rs 342 per share on a conservative basis. At the price band of Rs 265-310, the stock is at a discount of 22.5-9.4% to the NPV. In comparison, Unitech and DLF currently trade at a premium of 0.9% and 47.9% to NPV as per calculations. The DLF IPO price itself was at a premium of 21-33% to its estimated NPV. HDIL, which came out with an IPO early this month at a price band of Rs 430-500 per share is at a (discount)/premium of (12.1%) � 2.2% to its NPV.
Taking into account the price band of Rs 265-310, Omaxe is available at a FY07 P/E band of 18-21, as against a FY07 P/E of 53.6 for DLF, 35.1 for Unitech, 42.4 for Sobha and 23.9 for Parsvnath.
An investment can be considered in the Initial Public Offer (IPO) of Omaxe, a real-estate company with its current revenues comparable to players such as Sobha Developers and Parsvnath Developers.
Competition apart, the company’s ability to bring professionalism in terms of disclosure and transparency could be a vital indicator of the company’s performance.
At the offer price of Rs 265-310, the price-earnings multiple is 18-20 times the company’s consolidated earnings for 2006-07 on the expanded equity base. The offer is at a discount to peers of a similar size.
Further, based on the company’s planned projects and current projects under development, the PE (at the offer price) stands at 10-12 times its likely consolidated earnings two years from now.
Land Bank
Omaxe has declared land reserves of 3,255 acres, representing 150 million sq ft of developable area, mainly in North India, but spread across nine states
More so, the company is concentrated more in the National Central Region (NCR), in which it derives almost 73% revenues, and the towering presence of real estate majors like DLF and Ansal properties and Infrastructure, that operate in the same line of business and has a wider acceptance, pose a stiff competition to the company.
Also, one must take into account the rapid spurt in the PAT of the company. In the last one year, it has grown by 75% and considering last four years it has grown at a CAGR of more than 100%. Valuation
On the valuation front, considering the post-issue equity capital on a fully diluted basis including the green-shoe option, the company quotes a P/E of 19.80(x) and 23.17(x) at the lower and higher end of the price band respectively.
An immediate comparison with its peers like Ansal Housing, Parsvanath Developers and Sobha Developers, which quote a P/E of around 10(x), 26(x) and 43(x) respectively, the scrip’s price looks fair.
Brokerages echo in unison to subscribe to Omaxe Ltd's initial public offering, which opened for subscription Tuesday and close Friday.
Brokerage house SSKI's fair value estimate of Omaxe's NAV comes to Rs 448 per share, which gives a 44 per cent upside from the upper band of the price range of Rs 265-310 per share.
Edelweiss has also recommended subscribing to Omaxe IPO. On net present value basis, Edelweiss has estimated Omaxe's net asset value at Rs 400-405 per share. The IPO price band of Rs 265-310 is at a discount of 51-31 per cent to its NAV.
At the offer price band of Rs 265-310, Emkay Share and Stock Brokers has worked out Omaxe's PE to 17.8-20.8 times 2006-07 (Apr-Mar) EPS of Rs 14.9 (consolidated) on post issue equity of Rs 172.75 crore. According to the brokerage, the company's net asset value stands at Rs 487 per share, which is 57 per cent above the upper band of the price range of Rs 265- Rs 310.
On the flip side, Omaxe clearly runs geographical concentration risks with its presence largely restricted to the capital and neighbouring states. Notably, these are the very regions where the big boys from the segment, namely DLF and Unitech dominate.
Furthermore, being relatively recent entrants into the land accumulation game, Omaxe’s acquisition costs are bound to be significantly higher, which in turn will yield lesser margins. Finally, the recent run in with the IT authorities and its other cases, raise the spectre of corporate governance related issues.
Surprisingly, the Omaxe issue is priced at a discount to its net asset value and a reasonable earnings multiple.
In September 2006, real estate consultancy Trammel Crow Meghraj had carried out a valuation of all the 47 projects of Omaxe aggregating about 140 million sq ft (2,837 acres), and had arrived at a net asset value (NAV) of Rs 19,700 crore. Post-issue, the company will have market capitalisation in the range of Rs 4,214- Rs 5859 crore, which amounts to a meagre 22-30 per cent of the estimated NAV.
“This valuation has not been mentioned in the red herring prospectus following SEBI guidelines which bar real estate players from providing valuations,” said Rohtas Goel, chairman.
Real-estate developer Omaxe Ltd plans to raise as much as Rs 600 crore ($148 million) selling shares for the first time to finance land acquisition and repay loans.
The company will sell 17.8 million new shares of Rs 10 face value at Rs 265 to Rs 310 apiece, starting July 17. The price will be decided based on demand from investors after the sale ends on July 20, the New Delhi-based company said in a statement on Thursday
Real estate majors Unitech, Parsvnath and Omaxe are scouting for greenfield mall projects in smaller towns and cities for a faster roll out of their nation-wide retail footprint
The global funds are gung-ho about the prospects of India's real estate sector and have committed billions of dollars, but the Indian mutual funds are treading cautiously. The fund managers are concerned about overstretched and unjustified valuations of real-estate stocks and are quietly reducing their exposure to them.
Close on the heels of the mega public issue of Delhi-based realtor DLF Ltd, Housing Development and Infrastructure Ltd (HDIL), a group company of the Mumbai-based mortgage firm Dewan Housing Finance Ltd, plans to enter the capital market with a public issue of around Rs2,000 crore early July. Another Delhi-based realtor, Omaxe Developers Ltd, is also expected to hit the market around the same time
The right pronunciation of 'REIT' in English rhymes with "sweet" says Mr.D. Murali in The Hindu. I pronounced 'REIT' several times but it never sound 'sweet'! "Every morning I am going to do loud reading of The Hindu to improve my diction" I announced. But, my wife found out the other article by the same author. There she found out, 'REIT' is pronounced as 'REET'! So sweet of her.
What is REIT?
In its simplest form, REIT is a way of securitising property; it breaks down the ownership of one or more buildings into units that are sold to investors and usually listed on the stock market, writes Mr.Murali.
B. Benefits for Developer:
B1. You can have the cake and eat it too:
For the developer REIT is more profitable than keeping the ownership of the property and earning lease. 1. Developer constructs a property and gives it on lease. 2. Developer sets up REIT. But retains 30% stake. 3. Developer gets funds -- 70% of the value from the retail investors. 4. Indirectly, property is still in the developer's control! 5. Developer sets up REIT management firm and earns additional income from fees for managing (his) REIT. 6. Of course, income from lease and rent continues.
B2. Recycle Your Capital: Your unlocked funds keep on multiplying:
Now you have got your 70 % funds back. Which you can use in a new project. As soon as this project is ready you can sell it to your REIT and thus go on and on. Obviously, with every project you are going to multiply your funds and earn lots more than the lease.
C.Benefits for retail investors:
C1.From an investor’s perspective, units in a REIT are instruments for investment in addition to shares, units of mutual funds and bonds (government or private).
C2.The Satisfaction of 'Ownership of Property'
Thanks to Late Shri Dhirubhai, because of him we have an investor culture in India. Over a period, Indian investors have learned to give more value to 'the satisfaction of ownership' than to the amount of money they receive as a dividend. Every time when i am in Navi Mumbai, because of my couple of shares, i feel so proud of my companies and i wonder how much more satisfied i would have been if Anil and Mukesh would have had a couple of more brothers! But remember, you are going to give me that kind of satisfaction which i yearned for ages. Now you and your REIT is going to give the satisfaction of ownership of property, say for example a software park. Security may not let me go in, so what? Honor of owning a piece of property is great. Ask any Indian!
C3.Investor can become a millionaire by retirement!
Or he can provide for the fees of his new born baby when it gets admission to the junior college. Because REIT generally pay good dividends. Unbelievable but true. According to Mr. Dominic Whiting, Author Of ‘PLAYING THE REITS GAME’ in US REITs have paid around 13% average returns for last two decades! You have to be invested in your REIT for next 25/30 years. I am sure, considering RBIs negative opinion about funding real estate, you can make up your mind to give that much returns to your REIT's investors.
C4.How much?
Why Singapore?:
1. Since you can not set REIT in India you have to go overseas. Yes, Middle east is an option, but they say Singapore is better. 2. Singapore allows you to package your properties in India into your Singapore listed REIT. 3. Singapore offers tax exemption for corporates as well as individuals. 4. Singapore has a limit of 60% on debt gearing so you can acquire more funds than you can in Hong Kong.
REITs increase the valuation of the property:
As per Mr.Whiting, because of the tax exemptions and less expectations of the investors, REITs pay more - you get better rate for your property; transact more - increase in the numbers of transactions; so market value of the properties increases. We always enjoy price rise, isn't it?
Investment Grade Buildings:
This is a serious issue. We have very less Investment Grade Buildings. Out of 300$ Billion worth of commercial buildings only $83 Billion can be considered as Investment Grade. It means we have a lot of scope to improve the quality.
Indian real estate bubble:
"A REIT market in India could take off if the current boom turns into some kind of bust." As per Mr. Whiting, in US as well as in Japan, growth of REIT has happened only when market was low. So he expects for the sake of the growth of the REIT something should happen in our market!? Do you think current boom is only a bubble?
Indian real estate news:
“The Indian real estate is hampered by poor foreclosure laws, tedious property registration processes, tax and transaction laws that vary by the state and frequent contests over property ownership.” says Mr. Whiting. This is not a news for us. Is it?
"It is felt by some people that REITs have a heating effect on a country’s property market. However, REITs have exactly the opposite effect. If a REIT market is underpinned by appropriate legislation, REITs will have a price stabilising effect on the market." says The Chief Executive Officer of the Singapore-based Asian Public Real Estate Association (APREA — an association of listed real estate companies in the Asia Pacific), Mr Peter Mitchell.
Let us see how DLF is playing REIT game:
1.Advertising is not the only place to push your product: We all know, we can do it on editorial pages by publishing articles promoting your cause. See for example these statements: 1. "The one financial product that Indian investors badly need and continue to be denied is a real-estate investment trust, or REIT." : shows your concern for Indian citizens. 2. "India must decide whether we want to keep the business at home, in Mumbai or loose it to Singapore?" : shows how patriotic an Indian you are. 3."Indian investors are kept out of the market on the pretext that the real-estate business in India is unsuitable for the small guy." According to Oxford English Mini-Dictionary, PRETEXT n. a false reason used to justify an action. PRETEXT: 1)Title rights aren’t clear 2)Transactions are often funded with black money 3)Valuations are suspect. :Convince your fellow citizens to ignore these things. This shows how much you want them to prosper. 4. "If investors in Singapore can live with the market imperfections, there’s no reason why Indian investors, who are much more aware of the risks, can’t be trusted to make intelligent decisions." : shows you value intelligence and since people working in IT are called 'knowledge workers' they like to be called 'intelligent'. 5. To put all these arguments powerfully read this article more than once.
Indian real-estate billionaire Kushal Pal Singh's DLF group is raising $1 billion from investors, including Lehman Brothers Holdings Inc., and may sell shares in property trusts in the South Asian nation or overseas
In a tete-a-tete with Niren Shah, the chairman of Parsvnath Developers, Pradeep Jain, lashes out at competitors including the largest real estate player DLF for showing sudden jump in revenues and profits and claims that his company has maintained consistent growth over the past many years. But we are neither in the business of trading land, nor are we selling a finished structure leased out to somebody, to our associate company to book profits only in the books (referring to DLF). That is not operating profit or operating revenue.
So, if we say we have certain number of acres of land, we have acquired that land only after making sure that it is usable, under approved zones. We get the sale deed made, enter into an agreement and ensure an uninterrupted possession of that land with the company for urban development. We do not just draft memorandums of understanding (MOUs) without keeping ground reality in mind.
DLF promoter K P Singh has emerged as the richest real estate baron after his company's initial public offering closed on June 14.
Promoters of the dozen top listed real estate developers in the country, including DLF Ltd, which will be listed next month, are worth a massive Rs 125,845 crore (or over $30 billion).
India will need to change parts of its legal and taxation framework for real estate investment trusts (REITs) to find a foothold in the country’s booming real estate market, according to a joint research paper by credit rating agencies, Moody’s Investors Service, and Icra Ltd.
Another DLF company may hit the capital market over the next one year. DLF Group subsidiary, DLF Assets, may go public next year or get converted into Real Estate Investment Trust (REIT). It is at present awaiting SEBI`s guidelines on REITs. DE Shaw, the leading US hedge fund with over USD 30 billion in assets, has recently invested USD 400 million in DLF Assets. This could mean that the management could be seen as more investor friendly than in the past and those chances of negative surprises could be few and far between.
Sebi has issued new guidelines that lay out how the land reserves of real estate companies can be valued.
The companies that want to issue shares, must own the land and must have paid for it, and the land must be capable of doing what they project it to do in the prospectus,” said Pranay Vakil, chairman of Knight Frank. For example, a no-development land cannot be marked in the prospectus as land that can be developed as an IT park.
As perthe norms, companies are allowed only to show land that they own, not the land they intend to buy in the future. Moreover, the valuations have to be based on the current market value and not on future projections. Some real estate companies are inflating land bank values ahead of a public offer of shares by temporarily acquiring land from farmers for a fee and then returning the land to them after the public issue is launched, Damodaran said.
He said the farmers are paid a meager amount for signing the documents. “The first set of documents is what is made available when you build up the land bank and having raised your money, the second set of documents becomes effective. That is, on non-existent landbank you would have parted with money,” Damodaran said.
Financial Accounting Theory, (E. Schumann's 2007 Class), Historical Cost VS Fair Market Value By feelartistic on YouTub
Real-estate developer Omaxe Ltd plans to raise as much as Rs 600 crore ($148 million) selling shares for the first time to finance land acquisition and repay loans.
The company will sell 17.8 million new shares of Rs 10 face value at Rs 265 to Rs 310 apiece, starting July 17. The price will be decided based on demand from investors after the sale ends on July 20, the New Delhi-based company said in a statement on Thursday. .....
Real estate behemoth DLF is likely to invest about Rs 1,250 crore on expanding its multiplex business, DT Cinema, by adding about 500 screen in the next four to five years.....
Realty stocks on the bourses rallied on Wednesday even as the market value of DLF Ltd, India's biggest real estate firm, crossed Rs one-trillion mark on hope RBI may not raise interest rates at a credit review later this month. Its market cap jumped to Rs 1, 00,053 crore just before today's closing and settled at Rs 99,733 crore.
India's housing finance regulator is planning to release a house price index for five cities every six months in a survey which will expand to more cities over time, the regulator, the National Housing Bank (NHB), said.
India has little nationwide official data on prices in its booming housing market, and they are not reflected in its most widely watched measure of inflation, the wholesale price index.....NHB plans half-yearly house price index | Reuters.com
Bombay Stock Exchange, Asia's oldest, started a real estate index, seeking to reflect the appetite for shares of property developers that last month helped DLF Ltd. raise $2.4 billion in the country's biggest initial stock sale. DLF has a market value of $24 billion and will account for 36 percent of the 11-member BSE Realty index....Bloomberg.com: India
Stocks of real estate firms today fell by up to 5 per cent even as realty major DLF made its debut on the stock exchanges at a premium of around 11 per cent.
The Bombay Stock Exchange benchmark index, Sensex, which had declined over 100 points to an intra-day low of 14,731 ended the day down by 18 points at 14,861.89Realty stocks slump in weak market
Mehraboon Irani of Darashaw & Company is of the view that one can exit Akruti Nirman at present level.
Irani told CNBC-TV18, "Akruti Nirman, a real estate play, mainly focusing on Mumbai market, which is now ruling pretty high. As per the prospectus, they are executing thirty-five projects, the market value of which they stated was around Rs 4,000 crore, so the marketcap is around Rs 3,200 crore right now. The IPO according to me was priced very aggressively; I think it was rather expensive, even at the present levels, so it is not a stock, which attracts my attention because the valuation even now looks a little bit expensive."......Moneycontrol India :: News :: Exit Akruti Nirman, says Irani :: Akruti Nirman :: Stocks Views :: Mehraboon Irani of Darashaw & Company,Akruti Nirman
Indian real-estate billionaire Kushal Pal Singh's DLF group is raising $1 billion from investors, including Lehman Brothers Holdings Inc., and may sell shares in property trusts in the South Asian nation or overseas.Bloomberg.com: India
As REITs (real estate investment trusts) are yet to take shape in India, about a half a dozen realty firms have started the spadework for listing REIT-like vehicles on the Singapore Stock Exchange (SGX).
Banking on the easing of listing norms by the SGX two months ago, the Bangalore-based developer Embassy group, Ascendas, provider of business space solutions in Asia, and the Delhi-based DLF and Unitech are planning to list their fund structures, which mainly include REITs, on the SGX....Realty firms plan trusts to list in Singapore
Mumbai: Inorbit Malls (India) Pvt. Ltd, the mall division of Mumbai-based real estate developer K Raheja Group, is planning to launch luxury malls and discount malls. The company, which currently runs a mall in Mumbai’s western suburb of Malad, is creating two more formats, which could include the Inorbit name and a new sub-brand name. Inorbit, which is among the largest malls in India, has been running since 2003. The company, whose Malad mall gets around one million visitors a month, will open malls in Navi Mumbai, Pune and Hyderabad this year.....Inorbit Malls is planning luxury and discount malls across India - livemint
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