Thursday, July 17, 2008

Unitech receives Rs 740 cr from Lehman

Lehman has stuck a sweet deal for themselves with this low valuation for development on 97 acres. Unitech has/will pay off the slum dwellers under the SRA scheme with all their black money and will get an FSI of 2.5 . Lehman will bring in the brand name and the bear half the construction cost and receive a 50% stake. With 18 million sq/ft under development with an average price of 15000 per sq/ft ($350 per sq/ft roughly) that translates to a sale price of $6B dollars with $3B for Lehman. With Lehman's cost price being $170M , the profits can be staggering. I wouldn't be suprised if they setup their HQ in this complex and so do other Wall Street and European/Asian firms. This could be the Wall St of Dalal Street.

Fantastic deal here for Lehman. Here is the wikimapia location of the SRA(Look for Dawri Nagar), Right on the intersection of Nehru road and the Western Express highway. Excellent location for business as Bandra Kurla complex (BKC) is 10 mins away southbound, and the domestic airport 10 mins driving north. If my guess is right, major slums on the opposite side of the freeway too will become prime property.


DNA link here .
MUMBAI: Unitech Ltd on Thursday said it has received Rs 740 crore from global investment bank Lehman Brothers Real Estate Partners for a 50 per cent stake in the country's second largest realty firm's project here.

"On satisfactory completion of all the conditions under the transaction documents, Unitech Ltd on Thursday received subscription amount of Rs 740 crore," the realty major said in a filing to the Bombay Stock Exchange.

Lehman Brothers Real Estate Partners have been allotted 50 per cent stake in the initial phase of a master-planned project on the Western Expressway of Mumbai.

The construction cost for the initial phase would be borne by Lehman Brothers Real Estate and the Western Expressway JV, a joint venture of Unitech Ltd and its local partners, the filing added.

The initial phase entails development of one million square feet of office space out of the total developable area of around 18 million square feet.

Lehman Brothers' Real Estate group is a capital and advisory services provider to the real estate firms.

The group has presence in all of the major international markets, with investment bankers in New York, Los Angeles, London, Milan, Tokyo and Hong Kong.

18 comments:

mallapottell said...

This news item looks fishy.

Vik said...

Why do you think its fishy ?

Olduvai said...

This is positive news definitely in a season of high interest rates and uncertainity. Lehman is showing confidence given its own problems back home. Only fishy thing is whether they will be solvent through the duration of this project ;-)

Realty Rider said...

Real estate major Unitech Ltd is in final stages of negotiation with Lehman for a $500-million PE investment in its two commercial projects in Mumbai. The two sides have signed a non-disclosure agreement. According to sources, the investment may come into two SPVs floated by Unitech for the projects in Santa Cruz, and Lehman could pick up stake in the SPVs. Unitech is planning to sharpen its focus in the Mumbai market over the new two years. Unitech already has a land bank of 350 acres in Mumbai and in next two years the financial hub is expected to contribute more revenue for the company than the National Capital Region.Both the Mumbai projects would have a combined developable office space of 2 million sq ft in the initial phase.For more view- realtydigest.blogspot.com

Anonymous said...

Lehman must be putting in someone else's money. They are on knife's edge at the NY stock exchange and could go bankrupt anytime due to poor numbers on their balance sheet.

Anonymous said...

I'm sure they are investing somebody else's money under their name. If someone offered me this opportunity I would jump at it specially when I look at the paltry valuation which it has commanded. Most of the gravy would be taken off when the project is launched but for Lehman and its investors its a great deal. About the end users, they are the suckers who will pay the price to live in Mumbai. Enough Dalal St guys will invest here. I don't see this one falling apart. This project is not for anyone earning less then 50L/year either through business or capital markets and in Mumbai you will find 1000 people who can pre-book this in no time. case in point

Anonymous said...

Hiranandani when it launched the Chennai project Upscale. the first 4 buildings were sold to investors who booked in no time with the 2bedrooms at an average price of 50L. This 2Bed here could easily go for 1.5 crores.

mallapottell said...

Dawri Nagar and Hanuman Tekdi are the filthiest slums of Mumbai where this project is supposed to materialise. One look at the surrounding area, no right minded person would invest in the area. This project is a scam and doomed to fail if they launch it.

Anonymous said...

Its no different then any other slum in Mumbai. The whole point of the exercise is to demolish the slums and build multi story buldings with amenities. Mosf of that area has not seen any development over the past 25 years, but I believe they can build an oasis out there. Consider Grand Hyatt, the Kalpataru building which also came up on industrial/slum land. Profit is in the eye of the beholder. Give enough time, money and political clout anything is possible.

Anonymous said...

Haven't these Lehman guys learned nothing from US? I doubt Lehman made this deal right now or is probably using any of their own money. Real Estate is going down so fast, all the projections saysing 1.5Cr for 2 bedroom will go poof. The issue is lot of newspapers are in cahoots with Builders to save their advertising dollars.

Anonymous said...

Economics times reports,

Home sales in Greater Mumbai dip 70%, suburbs see 10-15% correction

Anonymous said...

It would be a good idea to have more housing data collected by Government agencies, rather than banks and builders and newspapers. This could avoid some of the conflict of interest issues. Some newspapers derive advertising revenue from the real estate lobby, so they cannot be considered completely impartial. Otherwise, we consumers can also form a lobby, like Affordable Housing Organization, and we can also start taking out ads in prominent newspapers asking buyers to wait. We could also sponsor cautionary articles about people buying into the bubble and losing lots of money. This would be one way to counter the real estate lobby. Any takers?

Observer.

Anonymous said...

They realtwhore community has the money for running out ads etc. Who will give us money to run the ads. Moreover, it is so bad out there, someone would get you killed. Money is king for a lot of people now days. Best is to keep quiet and watch as it unfolds.

mallapottell said...

Realty financiers affiliated with gangsters have poured lot of money in markets like Mumbai, pune & Bangalore. Once these dickheads realise that the market is likely to crash, there will be a scramble to recover their investments and this process will lead the medium level builders to sell at any price if they want to stay alive. Once the chain reaction sets in, the graph will start moving downwards. I wouldn’t be surprised to know that Lehman may be used by some big time Mafiosi/politician to make the bubble to survive a little longer.

Anonymous said...

We don't have to do anything but have patience. All markets are self correcting. The amount of money in this world is finite as even Bernake and company have discovered. Today the bay area's average price fell below 500k, a drop of 27% from peak. Same will happen to overvalued real estates.

mallapottell said...

Lehman Brothers Holdings Inc, stock price has fallen from $80 a year back to $19(EPS $-1.22). Wonder what is their rationale behind lending 740cr to unitech which is in a similar boat. May I request 'The Boss' to respond as he has indepth knowledge of upheavals in the financial market

Realty Rider said...

The first golden rule of investing is to diversify your portfolio. Even though high paying categories are always lucrative, the risk factors involved are even higher. Direct commodity investment is advisable only for market savvy investors, who keep a close tab on the market. Stocks, bonds etc should be a part of your saving instruments and all of it. Commodity oriented mutual funds and other such indirect investments though are less risky, they are not exactly what we term as ‘user friendly’.So what else is there?For many, real estate investment is an essential part of a well-rounded portfolio. Buying and selling real property, or even long-term owning, has proven to be one of the most profitable and least risky investments available.When it comes to investing in real estates, you will find a wide array of options like property oriented mutual funds, REIT (Real Estate Investment Trusts), and many other types of mortgage backed securities.However, one should keep in mind that they are not "zero risk" affairs - there's no such thing in investing! Prices fluctuate, relative to other goods and investment channels. But if you educate yourself with basic market laws and have sufficient cash and other liquid assets to be able to hold until the time to sell is right, you'll never have any reason to regret in making real estate investments a major portion of your portfolio.For more view- realtydigest.blogspot.com

Anonymous said...

LOL, this is ridiculouly funny.

I work on wall street currently and know for sure that Leahman may go belly up any time...

I hope Unitech has a back up plan