Lehman bankruptcy hits Indian developers

DNA reports
Unitech’ll miss crucial cash
MUMBAI: The collapse of Lehman Brothers, the world’s fourth-largest investment bank, has left some Indian real estate developers gasping.

Unitech Ltd, India’s second-largest developer by market capitalisation, had received Rs 740 crore from Lehman Brothers Real Estate Partners (REP) for its mixed use development project at Santacruz in Mumbai just two months ago on July 17.
That day, Unitech said Lehman will invest about $175 million (Rs 740 crore) and will acquire a 50% stake in the initial phase of a project on the Western Express Highway in Mumbai.
This initial phase entails development of 1 million sq ft of office space out of a total developable area of 18 million sq ft.
“Lehman and the Western Express JV will each contribute 50% of the construction costs,” Unitech said.
The Western Express JV meant Unitech and its local partner Rohan Developers.
A Unitech spokesperson said the company “has already received the $175 million in July, so there is no problem”.
The construction cost for the first phase of the project is pegged at Rs 300 crore.
As per their stake equation, Lehman has to invest Rs 150 crore but hasn’t to date, according to sources familiar with the development.
Also Unitech was expecting further investments from Lehman Bros for the same project and its Worli project also.
Unitech was expecting an additional Rs 500 crore from Lehman including for the Worli project.

The Ashok Piramal-backed Mumbai-based realty major, Peninsula Land Ltd, had signed a memorandum of understanding (MoU) with Lehman whereby the US-based company was to invest $125 million or Rs 576 crore in its projects for minority stakes.
The first tranche had to come for the Hyderabad project where Peninsula is developing an integrated township and IT Park on a 31-acre plot bought from Rallis India.
To a query by DNA Money on the investment status, Peninsula said: “The investment for Hyderabad would come once we start the construction … which would begin in the third quarter this year.”
The company said it would not be affected because most of the money was raised from non-Lehman sources.
Peninsula Land has earmarked Rs 2,500-3,000 crore for land acquisition in the next three to five years.
The investment was to come from Lehman and some of Peninsula’s domestic and offshore funds. But DLF, India’s largest developer, may be thanking its stars.
That’s because Lehman has already paid $200 million or Rs 921 crore to DLF Assets Ltd, a subsidiary.
“We have already received the payments so we are not facing any trouble,” a DLF spokesperson told DNA Money.

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.