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Mumbai:The government’s first-ever distressed real estate fund has approved around 165 projects for completing 100,000 homes over the next few years, its investment officer Irfan Kazi said.

Of these, 55 projects have received final approvals for completing 35,000 homes, he said in an analyst call organized by Macquarie Research.

The fund, set up under the Special Window for Affordable and Mid Income Housing (SWAMIH), is getting ready to deliver its first batch of 17 projects consisting of more than 6,000 homes by the end of fiscal year 2022.

It is ready to deliver two projects in Mumbai and Rewadi by April 2021.

Unlike private equity funds, Kazi said, this one considers only Rera-registered stressed and stalled projects with a positive net worth.

The fund, after consultation with government, also brought down the internal rate of return (IRR) from 15% to 12% after several projects could not meet the net worth criteria.

As for challenges, Kazi said that there is significant reluctance from lenders who refuse to take second charge of the project once the fund comes in.

“According to the regulations, SWAMIH takes first charge on assets and cash flows, which means they get paid first once the project is completed. Lenders are worried that acceding charge would result in change in asset classification, higher provisions, etc," he said.

Kazi said private sector banks have been more proactive than public sector banks about completing stuck projects. That said, the fund looks at projects with no lenders, where the developer was able to generate significant sales initially but which later slowed down.

In November 2019, the Centre announced the 25,000-crore SWAMIH Investment Fund to help complete more than 1,500 stalled housing projects, including those that have been declared non-performing assets (NPAs) or had been admitted for insolvency proceedings.

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