PE funds are buying residential apartments in bulk at a steep discount to market prices
Private equity (PE) firm Milestone Capital Advisors Ltd is all set to buy apartments in bulk in Assotech Realty Pvt. Ltd’s project in Gurgaon. The funding for this purchase will be done with an element of structured debt. This investment is one of the last couple of deals that remains to be done from Milestone Domestic Scheme III, a Rs 400 crore development fund, which has made eight investments so far.
Rising inventory levels and a liquidity crunch have brought the real estate sector to a halt and real estate PE funds are raising the funds to buy the unsold properties at lower than market rates. The developers are agreeing to these bulk deals as they are getting the liquid cash as the unsold flats inventory only keeps the money blocked. This has helped the money to be rolled out in the market and there is some activity going on in the real estate sector. However the profit margins for the realtors have dipped as they are selling the apartments at discounted prices. Plus there is a loss due to the number of months which the ready to move in property was lying unsold with the developer.
Earlier this month, Piramal Fund Management, backed by the Piramal Group, said it is looking to buy residential apartments in bulk from developers at a steep discount to market prices.
Its new Rs 350 crore Indiareit Apartment Fund, with an option to raise up to another Rs 350 crore, has received commitments of around Rs 100 crore from ultra-rich individual investors and family offices (companies that manage investments for a single family).
Source- Mint
Assotech Realty, Gurgaon, Indiareit Apartment Fund, Investment, Milestone Capital, PE, Piramal Fund Management, Private Equity, real estate PE funds
