Peninsula Brookfield buys flats worth Rs120 crore from Omkar Realtors2 min read . Updated: 09 Dec 2016, 03:03 AM IST
The structured debt transaction marks the last investment by Peninsula Brookfield India Real Estate Fund
Mumbai: Private equity (PE) firm Peninsula Brookfield Investment Managers Pvt. Ltd has bought apartments worth Rs120 crore in Omkar Realtors and Developers Ltd’s luxury residential project in south Mumbai, according to two people aware of the matter.
The structured debt transaction marks the last investment by Peninsula Brookfield India Real Estate Fund, the maiden fund of the PE firm, which is a joint venture between developer Peninsula Land Ltd and global alternative asset manager Brookfield Asset Management.
The fund has invested Rs1,100 crore in the form of structured debt by subscribing to non-convertible debentures across property markets.
Dev Santani, senior vice-president (real estate), Brookfield Asset Management, declined to comment citing company policy.
In the past three years, PE funds have been buying apartments in bulk at steep discounts, taking advantage of high inventory levels with property developers grappling with slow sales, said analysts.
Investors have put in both structured debt and equity in such transactions, which are expected to generate better risk-adjusted returns.
Gaurav Gupta, director of Omkar Realtors, said that the project is progressing well and inching towards delivery in another three months or so.
“It is a good deal and a win-win situation for both. The money will be used in the development of the project," Gupta said.
He did not disclose more details.
In the past three years, the Peninsula Brookfield fund has invested in projects of Mahaveer Group, Total Environment Building Systems Pvt. Ltd and Mantri Realty in Bengaluru, Umang Realtech Pvt. Ltd in New Delhi, Ansal Properties and Infrastructure Ltd in Greater Noida and Incor Infrastructure in Hyderabad.
The Omkar deal would be the fund’s first investment in Mumbai.
The fund has also made its first exit from its 2014 investment in two projects of Total Environment.
It is uncertain if the two partners will do a second series of the fund, considering Brookfield Asset Management has started to invest directly in residential projects in India, from its new $9 billion global realty fund.
In fact, Brookfield recently invested Rs450 crore in Peninsula Land’s premium project in Byculla in Mumbai, marking its first residential deal from the global corpus.
Speaking on the general trend of apartment buying, Diwakar Rana, the managing director of capital markets (India) at property advisory Cushman and Wakefield, said: “Bulk buying of apartments in luxury projects that are at an advanced stage makes sense because the price upside is higher because one is buying at a discount."
Rana said that this also helps the developer get the working capital to complete the project without increasing the company’s debt significantly.