Sunteck Realty desirous to buy distressed assets from competitiors

Q: Sunteck Realty, whose clients include Bollywood celebrities, is desiring private equity funds to buy distressed assets from competitor running under debt.

Aneek Das,

5th August 2015

Real estate News in Mumbai

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Replies (3)

Very clever sign of business. The company's funds are chasing commercial properties more for better returns, and Sunteck may look to double the share of its office and retail assets to about 40% and cut residential assets from 80% if there is increased demand.

Amreesh Murugan,

5th August 2015

Comment

Right Amreesh,
It seems to me that Sunteck Realty is aiming to boost rental income from yield generating commercial assets 10-fold to 2 billion rupees in the next 3 to 4 years.

Even as Khetan expects higher prices for his condominium projects. But seeing the current real estate market across the country, high-end home sales will remain muted over the next few years and prices will stagnate.

Veena K,

5th August 2015

As per Sunteck Realty, they feel that there are lot of distressed assets in the market so they can grow the company to a different level, but for that they will require capital. They will try to cut their debt levels further and still do acquisitions with their strong cash flows.

Diwakar Shetty,

5th August 2015

As per a report by Liases Foras, home sale in India's top 6 property markets fell 8% in the quarter through March from a year earlier. Which estimates it will take at least 46 months to find buyers for unsold homes in Mumbai alone.

Diwakar Shetty,

5th August 2015

Comment

Yes, i have the information about Mumbai unsold inventory. Most of the India's top developers have seen more than 60% debt tide.

Debt at Godrej Properties Ltd. climbed 63% to 27.64 billion rupees in the quarter through March 31 from a year earlier, while DLF Ltd., India's biggest, saw a 7.7% increase in its net debt to 209.7 billion rupees.

Veena K,

5th August 2015

Don't forget that the Sunteck Realty itself with a net debt at 9.6 billion rupees as of March 31 and plans to build condominiums and offices after purchasing the assets, and may lend its brand to help complete projects that are stuck. They are also ready to develop property jointly with the existing builder.

Diwakar Shetty,

5th August 2015

True Aneek,
The company is in talks with investors as it sees earning opportunities similar to those that followed the 2008 collapse of Lehman Brothers Holdings Inc. Developers with huge debt are in pain with high interest rates and repaying debt is a struggle for many of them. They think that this is the best time to strong their balance sheet to grow the company double or triple from here.

Veena K,

5th August 2015

Comment

Right Veena...
Many Indian real estate companies struggling with a funding crush and they are turning to private equity as lenders. As they are struggling to clear bad loans so they are avoiding more risk. Sunteck is among those that appeared relatively intact from the global meltdown and a domestic slowdown, even as bigger competitors found themselves holding excess inventory among drying sales.

Amreesh Murugan,

5th August 2015