Godrej Properties, Nirmal Ventures ink JV to develop suburban Mumbai project
Bengaluru: Godrej Properties Ltd has entered into a joint venture with Nirmal Ventures to develop a residential project in suburban Thane, near Mumbai, the developer said on Thursday morning.
Nirmal Ventures, a business vertical of realty firm Nirmal, has also raised Rs450 crore of debt from ECL Finance Ltd, a part of financial services firm Edelweiss Group, the company said on Thursday. The debt has been raised mainly as construction finance for the Thane project.
ECL, an existing lender in the asset, had earlier given another Rs200 crore and has now extended another Rs450 crore, said Dharmesh Jain, chairman and managing director, Nirmal.
The Thane project, spread across 14 acres and with saleable area of 2.1 million sq.ft, is going to be developed under a development management agreement.
Under the development management model, large realty firms typically step in as development managers for smaller developers and landowners, in return for a share of the revenue, share of profit or a management fee. Mumbai-based Godrej Properties has entered into similar partnership models in many instances in the past.
In the Thane project, Godrej Properties will build homes of various configurations along with a small retail component to support residential development.
“We are happy to add this new project in Thane, a key micro market of Mumbai. This strengthens our development portfolio in Thane and fits well with our strategy of deepening our presence in key markets across India’s leading cities,” Pirojsha Godrej, executive chairman, Godrej Properties, said in a statement.
“This partnership is special to us considering the incredible brand Godrej is,”Jain said.
In August, Nirmal raised Rs570 crore of debt financing from L&T Finance Holdings Ltd and signed a joint development agreement with L&T Realty Ltd for a residential project in suburban Mumbai.
The Thane land is co-owned by Nirmal and Videocon Industries Ltd.
Nirmal, which owns the land in Mulund, brought in L&T Realty to develop the residential project.
“There are developers who are selling because of liquidity issues but the expectations are now realistic. It’s a buyer’s market,” Mohit Malhotra, managing director and chief executive, Godrej Properties, told Mint in an interview in July.
Property advisory firm JLL, which is the transaction advisory to the deal, said the project is expected to generate a turnover of around Rs3,500 crore over the next five years.
“Thane has seen significant capital appreciation in the last couple of years. An integrated mixed-use project of this scale and size will certainly be a good choice for end-users and investors alike. The coming together of two promising brands—Godrej and Nirmal—crafts a rare opportunity addressing the current concern of buyers wanting to invest with established developers having proven track records,” said Ramesh Nair, chief executive officer and country head, JLL India.
Mid-sized developers like Nirmal, which have land assets but may not have the bandwidth to develop it entirely on its own, have been in talks with larger developers to enter into development agreements to monetize land parcels and reduce debt.
The prolonged slowdown in the real estate sector has thrown up several so-called distressed opportunities for established firms such as Godrej Properties.
Between April and July, Godrej Properties signed up for land parcels—three in the National Capital Region (NCR) and one in Bengaluru. These were a mix of outright buys and joint development deals. Before the Nirmal deal, Godrej bought a 14.8-acre land on Dwarka Expressway from BPTP under the Godrej Residential Investment Program II (GRIP-II), a $275 million fund.
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