Home >Companies >Peninsula Land plans second realty fund

Bangalore: Peninsula Land Ltd, an Ashok Piramal group company, has acquired a number of land assets in recent months and plans to raise a second fund.

The Mumbai-focused realty firm has bought land in its core operational market Mumbai as well as in new markets such as Bangalore, Lonavala and Pune to establish a pan-India footprint, said executive vice-chairman Rajeev Piramal.

For its second real estate fund, the company will secure money from domestic investors along with a Canadian firm that “deals in real estate construction, financial advisory and asset management", Piramal said.

He didn’t disclose the planned size of the fund.

In fiscal 2011, Peninsula Land acquired 10 new projects, investing around 600 crore, according to a May report by brokerage Prabhudas Lilladher Pvt. Ltd.

The company has to pay another 300 crore for the projects, it added.

The developer has invested in five projects with the 180 crore Peninsula Realty Fund, Piramal said.

The new projects will open up development potential of nearly 30 million sq. ft for the company. A central Mumbai property in Sewri alone will generate about 2 million sq. ft of saleable area.

“The quality of assets that the company has acquired is good. These are projects that should materialize quickly," said Kejal Mehta, research analyst, institutional equities, Prabhudas Lilladher.

On raising a second fund, Mehta said fund-raising in the current environment will not be easy because there isn’t much capital available to the real estate sector.

Land purchases have slowed considerably this year as developers are battling dipping home sales and delays in securing project approvals in markets such as Mumbai.

Peninsula Land will invest about 250 crore in total in the 18-acre property in Sewri, in which it has acquired a 10% stake after paying an initial 100 crore, said Piramal.

As project manager, it will get another 8% stake in the special purpose vehicle (SPV) created for developing the property. The other stakeholders are IL&FS Investment Managers Ltd and HEM Bhattad Developers.

Peninsula Land has built a substantial project pipeline in recent months and is negotiating another eight-nine transactions, including high-value city-centric properties.

“We are still one-two big transactions away before we reach saturation for now," said Piramal.

Peninsula Land had paid an advance of 10 crore for acquiring a 300-acre township near Thane, said a property analyst who didn’t want to be identified.

Besides this, the company is a serious contender for the development-cum-sale plan of Raymond Ltd’s 125-acre factory land in Thane, he added.

The company will also mark its entry into Bangalore with a residential project.

In the January-March quarter, Peninsula Land’s revenue declined 60% over the year-ago period to 90 crore, and by 23.7% over the preceding three months.

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