Shapoorji Pallonji Real Estate plans land monetization programme
Shapoorji Pallonji Real Estate is also in the process of raising another $200 million equity under its mid-income housing platform, Joyville, from existing investors
Mumbai: Shapoorji Pallonji group’s real estate arm plans to monetize about 100 acres of land over the next two years to raise about ₹ 2,000 crore, bulk of which will be used to repay debt. Shapoorji Pallonji Real Estate is also in the process of raising another $200 million equity under its mid-income housing platform, Joyville, from existing investors—International Finance Corporation, Asian Development Bank and Standard Chartered Private Equity whose real estate business is now part of UK-based Actis.
“We have a big land monetization plan. While we have a strong development pipeline, equally important is our asset monetization plan. We have so many assets to monetize,” Venkatesh Gopalkrishnan, chief executive officer at Shapoorji Pallonji Real Estate, said in an interview.
As part of its asset monetization programme, the company plans to divest about 20-25% of legacy lands, which it owned for years, and sell a fully-leased 2 million sq. ft software park called SP Infocity in Pune.
The land parcels include 30-40 acres in Pune, 25 acres in Kolkata and 30-40 acres in Mumbai.
Created in 2016, the Joyville platform had raised $250 million in its first round.
The funds have been utilized in three existing and four forthcoming residential projects.
“We can’t hold on to land endlessly,” said Gopalkrishnan.
He declined to disclose the total debt.
Shapoorji Pallonji Real Estate has an outstanding debt of over ₹ 4,000 crore, said two people familiar with the matter. The company plans to trim the debt to about ₹1,500 crore over the next one or two years, said the two people cited above, who did not want to be named.
“We have one eye on debt. It is not very high. Considering we have around 90 million square feet of development in the pipeline and so much of land holdings, we are comfortable. But, at the same time, we don’t want to go out of proportion,” said Gopalkrishnan.
Meanwhile, Shapoorji Pallonji is also sharply ramping up its residential business after a slow pace of launches in the last one year. The company plans to start about 15 new projects spanning both mid-income and luxury housing over the next year, compared with only five in the last 12 months.
The forthcoming projects will mainly include new housing projects, besides a few comprising new phases of existing projects. The company is also developing about six million sq. ft of commercial space in Pune.
"End of this financial year, we should be selling around 3,500 homes, which is double of what we did last financial year,” said Gopalkrishnan. “This is mainly on the back of new launches.”
The company has unsold inventory of about 35% to 40% across most of its projects, he said, adding it now plans to sell about 3,500 to 4,000 homes each year.
Shapoorji Pallonji is also gearing up to enter the national capital region centred on Delhi over the next four to six weeks through the launch of homes under the Joyville platform in Gurugram. It is also in advanced stages of acquiring land to launch projects in Hyderabad and Chennai on the same platform.
"In all likelihood, the investments will continue. We are working on it (the second round of fundraising on Joyville platform)," he said without elaborating.
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