HDFC Property fund plans four exits and give handsome returns to the investors
Since the market sentiment has improved in the real estate, many property funds are exiting out of the existing investments after mopping up a handsome return. HDFC Property Fund, backed by Housing Development Finance Corp. Ltd, plans to exit four of its investments made from its offshore fund portfolio by the end of this year and hopes to earn healthy returns.
The offshore fund HIREF International LLC was launched in 2007, which had a nine-year-old fund life. This went on to make 17 investments, 58% of which are in residential projects, 34% in commercial office, 7% in entity level and 1% in hospitality.
The sources close to the developments mentioned that though the fund’s lifecycle ends in 2016, it is a good idea to start exits now. This is needed because money needs to be returned to investors and it’s been 4-5 years since these investments were made. So far, the fund has made only one exit, from its investment in Lodha Excelus, an office building in central Mumbai.
The four exits are relatively timely and are expected to generate a weighted average IRR (internal rate of return) of 23%.
Private equity (PE) exits in the real estate fund space suffered a string of setbacks in the last couple of years due to the economic slowdown. Many factors such as slowdown in project execution and sales, and rupee depreciation had led to many funds not being able to generate robust returns to investors.
The exits planned from the first fund are from three residential projects in Mumbai and a mixed-use project in Bangalore.
Source- Mint
Exit, HDFC Property Fund, HIREF International, HIREF International LLC, Investments, offshore fund, Private Equity
