Looks like expertise and project execution skills are finally being taken note of. The last bull run saw entities like DLF and others being played up in a big way. Now, with valuations melting conservative players like Mahindra Lifespaces are moving in for the kill.



http://steelguru.com/news/index/2008/12/17/NzU2MDQ%3D/PE_funds_approach_M%2526M_to_take_over_2_SEZs.html

PE funds approach M&M to take over 2 SEZs

BL reported that the downturn in real estate has left many in a quandary and private equity funds are no exception. Some of them now are looking up to more established promoters and developers to bale them out from large size projects such as special economic zones.

Mr Arun Nanda executive director of Mahindra and Mahindra said that some private equity players had recently approached him to take over two notified SEZ projects in Maharashtra, while declining to furnish details stating that it would hamper prospects.

Industry sources said that more than half of the 260 odd notified SEZs would either not come up or the timeframe would be extended. This, they say it would make their exit options difficult.

Last week, the country’s largest developer DLF asked the Commerce Ministry to denotify its IT SEZ in Delhi as it would be difficult to sell office space in the midst of the slowdown.

Conceding that not all SEZs would see the light of the day, Mr Nanda said that SEZs should be seen as infrastructure projects and not mere real estate propositions. He said that “We look at them as islands of excellence, which with integrated facilities will work.”

Agreeing that the market was tough and funding a greater constraint, he said that it was unfortunate that the basic concept of an SEZ had been misunderstood by some.

Referring to Mahindra World City, Chennai, Mr Nanda said that the residential and social infrastructure came after the commercial spaces were leased out. He said that “We first created jobs and then the residential.” Though the residential and social space can go up 50% of the project span only 35%, 350 acres would be utilized.

He said that the Chennai venture is a JV between the Mahindras and the Tamil Nadu Industrial Development Corporation. Further expansion of over 1,000 acres was being contemplated and it would be in the north of Chennai, while ruling out Gummudipoondi as the preferred destination.

He added that the Chennai port has a larger role to play in development and there would be acceleration in the manufacturing sector, shedding the prominent IT garb the city had for worn thus far.

Mr Nanda said that the Chennai experience stood the company in good stead at Jaipur and the project was up in 2 years. He said that “The Rajasthan Government, especially the officials should be complimented for the speed we were able to set shop there. Clearances came fast and clients such as Infosys and Deutsche Bank set a deadline for July 2008.”

Two more SEZ of a much smaller scale are in the pipeline at Thane and Pune. The Thane one would be a biotech SEZ across 72 acres. In Pune, the social impact assessment study was complete.

While funding remains an overall issue, the conservative approach adopted by Mahindras in the real estate space helped. He said that “Being not highly leveraged, we feel it is the right time to consolidate and get future ready. In difficult times, people look at reputed companies and it is here we score. Mahindra Life space is a zero debt company. The Chennai SEZ would require INR 500 crore to INR 600 crore and Jaipur a little more and we stand well covered.”

Mr Nanada further added that there would be no deceleration in any of the company’s SEZ projects as it had made commitments for delivery. Mahindra Life space would, however, phase out its projects that is if 4 towers were planned, two would be taken up and the others would be deferred to ensure alignment with the current demand. He said that “There would be no job cuts and, in fact, we are putting out an advertisement for additional manpower."

Originally posted by shivkumar ..... While funding remains an overall issue, the conservative approach adopted by Mahindras in the real estate space helped. He said that “Being not highly leveraged, we feel it is the right time to consolidate and get future ready. In difficult times, people look at reputed companies and it is here we score. Mahindra Life space is a zero debt company. The Chennai SEZ would require INR 500 crore to INR 600 crore and Jaipur a little more and we stand well covered.” .......“There would be no job cuts and, in fact, we are putting out an advertisement for additional manpower."

A refreshing difference relative to its peer group!

Companies like HDIL will offer trading opportunities at best. It is building the biggest bubble in Mumbai that would go bust if more air is pumped into it - TDR or Transfer of Development Rights. 

HDIL has begun construction of the rehab project to house slum dwellers at the Mumbai airport, but it is said to be facing severe shortage of cash to carry out the project.

Remember, the SRA scheme is a free project and no revenue is expected to accrue till work on the buildings to be sold in the open market commences. So far, there is no sign of the work commencing.

In fact, HDIL has put out big advertisements in October-November
offering sale of TDR in the open market. Consequently, the price for
TDR per sq ft crashed from some Rs 3600 to Rs 1300 over four to five
months. According to unconfirmed reports, it is said to have fallen
below Rs 1000 per sq ft now.

HDIL is said to have sold around 3 lakh sq ft of TDR from the 1.74
million sq ft of TDR received by it for the airport slum project.

The NAV based valuation of HDIL by brokerages is very rich because prices will crash the moment the capacity hits the market.

Its a replay of the Slum redevelopment scheme of the 1990s. Now every
second building planned in Mumbai is a tower. From a maximum 7 storey
structure, every new bldg planned is a 14 storey structure. About 55
per cent of Mumbaikars live in buildings while the rest struggle in
slums. If even 20 per cent of the 7 storeyed bldgs are redeveloped
into towers, you will see a huge capacity inflow.

But the SRA schemes will virtually treble the housing stock. So prices
will crash since not everyone can afford the high prices.

Shivkumar: Do you have a view on Godrej Industries or are you staying purely with Mah. Life?