Supertech to raise Rs 500 crore

The leading real estate firm Supertech is planning to list its six of the rented as well as operational malls with REIT (real estate investment trust) to raise Rs 500 crore in the duration of next two years which is the year 2015 and 2016. As per one of the latest survey Supertech has more than 2 million sq ft of retail space in its six malls out of which two are in Ghaziabad and one each is in Noida, Rudrapur, Haridwar, Rudrapur, and Meerut.

However there are few products under construction by Supertech. Currently Supertech is in discussion with one of the Singaporean company which has experience in setting up the real estate investment trust in various real estate markets. As per the statement of officials we are in the starting stage for the listing of our assets and REITs own the properties to get the rental income and distribute it among investors. For real estate investors they provides high dividend with a liquid option where one can invest in the real estate sector.

Most of the real estate firm in the country and as well as some of the private-equity funds are showing interest to set up the REITs because stock market regulator SEBI (Securities and Exchange Board of India) notified its rules to list the trusts in September 2014 with a aim to view and attract more and more funds in a transparent manner, so that real estate developers can pool the money for the development of new projects. But till now no REIT is listed in India and it’s just because the lack of clarity in taxation process. With a aim to encourage local listing, central government is decided to do some capital gains in the favor of sponsors in the Union budget of 2015 at the time of listing of REITs on rental income.

However the capital gain will be applicable for all the direct transfer of same or different assets to any kind of these trusts. But still the budget is not offering any clarity on dividend distribution t as. The major real estate developers such as; RMZ, DLF, Embassy Office Parks, Ambience and many others with PE firms such as; Kotak Realty Fund, Red Fort Capital and Blackstone is known for listing their assets as REITs. They have develop the acquired rent producing assets in past few years as it could attract more than $1 billion or Rs 6,280 crore in 2015 witht eh additional tax benefits announced in the union budget of 2015, said the property consultant from JLL India. However most of the property experts said that in near future more exemptions can be made by the state as well as central government to make its segment more attractive for real estate players.

But it’s clear that the Capital gains taxes will exempted on the transfer of any SPV (special purpose vehicles set up to carry new real estate projects) share by different or same sponsors but at the MAT ( minimum alternate tax) is still applicable. If the minimum alternate tax will be so it will make REITs more attractive for real estate developer, says Shweta Aggarwal, Director of BMR & Associates.

Supertech is planning to invest amount Rs 2, 400 crore

Leading developer, Supertech is planning to invest the hard cash amount of Rs 2, 400 crore to construct and develop the township at Gurgaon, Haryana in a span of five years. This township will be developed on an area of 140 acres land, which company has bought recently from Parsvnath Developers.

As per the statement of Mohit Arora, Managing Director of Supertech, “Recently our company has done dream deal, which is to buy 140 acres land from Parsvnath Developers; however the cost of deal was about Rs 7, 00 crore”. Supertech, which is one of the fastest growing real estate firm based out Noida will develop advanced integrated township on this land area at Sohna, Gurgaon, the more he added.

In an integrated township, Supertech is planning to develop more than 1,800 independent homes as well as villas and more than 1,900 flats, however it will be the fourth largest project of the company. While talking about investment Arora stated that it is expected that total cost of township will be about Rs 2,400 crore including Rs 700 crore of land cost. The more added that we have made payment for land and we are planning to raise Rs 500 to 700 crore from bank debt to meet the cost of construction; however the rest will be founded through internal accruals as well as sales bookings in project.

The whole township will be developed in different phases and it is expected that whole construction will be completed by year 2020. Supertech has fixed the BSP (Basic Selling Price) for this particular township project, is Rs 4,400 – 4,750 per sq ft and it will also depand on the payment plan. In September 2014, Parsvnath Developers had sold the land to Supertech in a deal of Rs 665 crore.

Till now Supertech has completed the construction for more than 33 million sq ft real estate in different projects and currently company is working on 90 million sq ft area in many different projects. Apart from Greater Noida or Noida or as well as in Gurgaon, Supertech has also marked its presence in other cities also such as; Rudrapur, Moradabad, Ghaziabad, Meerut, Bengaluru, Haridwar and Moradabad.

Pinning their hopes on the Modi government at the centre to relax the proposed norms, real estate developers have been buying more land from farmers over the past year than usual because of apprehension that the new law may raise cost of land acquisition.

“Companies have been buying land in their catchment areas as they fear that the land acquisition bill will make it more expensive and tedious to buy land in the future,” said Amit Goenka, chief executive officer of private equity fund Nisus Finance, which is currently working with developers in Mumbai, Pune and Bangalore to fund large land purchases.

The land acquisition bill that was passed last year but is yet to come into force proposes to double the compensation for acquisition of land in urban areas while land acquired in rural areas will entail four times compensation. The clause mandating consent of 80% of land owners for a private project will delay the process of acquiring land and further increase project costs for developers.

“The new bill could raise prices of land in key areas where we want to operate and build projects. We had been acquiring land in the area for the last few years but we have increased the pace of acquisition in the last eight months,” said RK Arora, managing director of Supertech who has acquired three different land parcels around Gurgaon totalling about 350 acres over the past year.

The rural development ministry is likely to suggest relaxation of norms including scrapping of the mandatory consent provision for public-private partnership or PPP projects and scaling it down in the case of private projects from 80% to 50%. There will be a lot of speculation and there won’t be any price control, which will eventually push up property prices,” said Shyam Sundar Pani, president of industry body Global Initiative for Restructuring Environment and Management.

Real estate developer Chintels, which has large landholdings in and around Gurgaon, has acquired about 150 acres of land in the last one year. “There is certainly a concern around the new land acquisition bill,” said Prashant Solomon, managing director of Chintels. “There is certainly a concern around the new land acquisition bill, “said Prashant Solomon, managing director of Chintels. Anckur Srivasttava, chairman of GenReal Property Advisers said that while the impact of the bill on commercial and residential real estate would be visible across the country it would be considerably higher in states such as Uttar Pradesh where land is acquired and allotted by the government. “The bigger impact, however, will be felt in industrial real estate for companies and for the infrastructure sector,” he said.

Even as optimism has returned in the sector with the installation of the new government at the Centre, an increase in cost of land acquisition could dampen sentiment. Several developers have therefore been raising money from private equity funds as well as non-banking financial companies to buy land in different parts of the country. “Land acquisition will be a huge challenge once the bill is finalized”, say real estate developers who have seen home sales drop drastically over the past two years as property prices rose in a slowing economy. Developers are hoping that the government will dilute some of the provisions of the bill as it is reportedly considering.