Is leverage / mezzanine funding a double edged sword in project financing?
Is leverage / mezzanine funding a double edged sword in project financing?

Is leverage / mezzanine funding a double edged sword in project financing?

February 27th, Mumbai
Grand Salon Part 1, Grand Hyatt, Kalina, Santacruz - East

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Priya Mathias
Priya
Priya Mathias
Country Head - India, Real EstateGRI Club
+91 98339-45086

Overview

The fine art of portfolio balance: What really drives the real estate landscape in India today?


GRI Club India members met over a breakfast hosted by GRI Club Partner PwC recently in Mumbai to debate the challenges faced by developers and financiers in the Indian residential sector. The high-spirited discussions centred on evolving business models, single asset vs multi-asset class investment strategies and whether the residential market is in need of a revival.


A summary of the discussion points:

Participants discussed how developers are now largely funded by debt which, from the financiers’ point of view, has resulted in an asset-liability mismatch.

Asset-liability mismatches, as was observed,is not a new phenomenon: in the late 1990s, resulted in a crisis amongst non-banking financial companies (NBFCs) and created liquidity challenges for other financiers holding investments in real estate assets.

The mitigating factor against the asset-liability mismatch today is that there is far more equity capital, although management quality remains an issue. The avenues for sourcing equity financing and recapitalising companies in order to manage risk capital, look much better.

In terms of M&A activity within the sector, it was noted that there has been a  shift towards consolidation, the sale of portfolios and merger deals, although some M&A deals are being drawn out and taking time to complete.

A change in the market has been noticed, with an increase in risks that is affecting the level of equity funding required to acquire assets and the risks valuation metrics have also changed, with an expected decline in future multiples. Participants concluded that funding frameworks had shifted to a new paradigm and that going forward, it was necessary to understand exactly what was the ‘new normal’.

Key executives who are part of GRI community attended the meeting, on behalf of investment banks and funds, advisors, operators and developers, such as Anita Kataria (Raheja Universal), Hari Krishna V (CPPIB - India), Manoj Menda (RMZ Corp), Aditya Chandak (Chandak Group), Sanjay Hinduja (Shapoorji Pallonji Finance), Abdullah Rashed Jasem Al Abdooli (Al Marjan Island), Pradeep Khanna (Reliance Nippon Life Asset Mgmt), and Kaushik Desai (Walton Street).


Timetable
Wednesday, February 27th

9:00 am to 10:00 am | Registrations and Breakfast Networking
10:00 am to 11:00 am | Discussions
11:00 am to 11:30 am | Coffee Networking

Meet our exclusive format

GRI has no speakers, no presentations. Instead, you have a selection of closed-door discussions where everyone can participate.
Much like a conversation in your own living room, the dynamic environment allows you to engage with your peers in an informal and collegial setting.
Club Partners
BPG India Private
CHEC
Sectoral Club Partners
Al Marjan Island
Ascendas-Singbridge India
EverVantage
GAR Corp.
JLL
Max Estates Limited
PwC
www.brookfield.com
www.brookfield.com
+1 212 417 2504
Mumbai | Maharashtra | India
Asset Management Brookfield is a global alternative asset manager with over US$ 385 billion of assets under management and has a history, of over 100 years, of owning and operating assets with a focus on property, infrastructure, renewable energy and private equity. Brookfield operates one of the largest real estate investment platforms in the world, managing over US$190 billion of real estate, across multiple asset classes, typically through industry-leading platforms that are dominant in their geography and sector. Brookfield has been active in India since 2009 and has executed several investments. Presently, we are one of the largest owners and managers of commercial office properties in India spanning more than 25 million SF in tier I metro cities in India.
http://www.portcitycolombo.lk/about/
Colombo | Sri Lanka
Port City Colombo is a brand new city development built as an extension of the existing Colombo CBD with an initial investment of US$1.4billion and an expected US$15billion overall investment when completed. Spanning 269 hectares, it is a sea reclamation project joined to the current central business district. Port City Colombo is made up of 5 different precincts which comprises of Financial District, Central Park Living, International Island, The Marina and Island Living. When completed, Port City Colombo is estimated to have some 5.65 million square metres of build up space, boasting some of the best in design in terms of Grade A offices, Medical Facilities, Educational Facilities, Integrated Resort, Marina, Retail Destinations, Hotels and various Lifestyle Developments. Using the latest sustainable city design and smart city concepts, Port City Colombo will be the hub of South Asia.
https://www.marjanislandresort.com
Marjan is the master-developer of freehold property in Ras Al Khaimah, responsible for path-breaking developments aimed at positioning Ras Al Khaimah as one of the region’s preferred lifestyle and investment hubs. 
Mandated with developing waterfront, urban and mountain destinations that will add to the competitiveness of the emirate, Marjan’s strategic master-planning approach is to leverage Ras Al Khaimah’s natural assets and lay the foundations of the emirate’s future expansions.
http://www.ascendas.com/
http://www.ascendas.com/
+91 80 4188 0000
Bangalore | India
Real Estate Private Funds Ascendas-Singbridge Group is Asia’s leading sustainable urban development and business space solutions provider with Assets Under Management exceeding S$20 billion.

Jointly owned by Temasek Holdings and JTC Corporation through a 51:49 partnership, the Group undertakes urbanisation projects spanning townships, mixed-use developments and business/industrial parks. Headquartered in Singapore, Ascendas-Singbridge has projects in 28 cities across 9 countries in Asia, including Australia, China, India, Indonesia, Singapore and South Korea.

In India, Ascendas-Singbridge specialises in developing, managing and marketing IT parks, industrial & logistics parks, and integrated developments. Leveraging its strong track record and best practices in the region, Ascendas-Singbridge offers a level of service and quality to its tenants which stand way above the rest.
http://evervantage.in/
http://evervantage.in/
+91 80 2559 0010
Bangalore | Karnataka | India
EverVantage is a real estate consultancy firm that caters to the needs of developers, high net worth individuals, and investors across the country. Equipped with its single-minded pursuit of ‘forEver adVantage’, the firm provides services like fund raising, hospitality advisory, portfolio management, land transactions, leasing and transaction management, and strategy advisory. Adhering to its belief of ‘People over Projections’, EverVantage prioritizes right end-to-end solutions over simply closing a deal for its clients.
http://www.garcorp.in/
http://www.garcorp.in/
+91 40 23393703
Hyderabad | Telangana | India
The Group is a pioneer in the creation of commercial office parks in Hyderabad. GAR Corp is widely renowned for its unique reputation of Build – Lease – Own -Operate model which enables long term ownership of assets. GAR Corp has a strong track record of servicing Global IT / ITes Clients and our facilities currently cater to more than 60,000 employees working with the industry’s most stable and marquee client base. Presently, the Group is on track to create an asset base of 12 million square feet in the office parks segment by 2020.
JLL (NYSE: JLL) is a leading professional services firm specializing in real estate and investment management. JLL, a Fortune 500 company, helps owners, users and real estate investors to achieve their business ambitions. JLL began operating in Latin America 25 years ago. Today, the company has 2,600 employees in the region, 13 corporate offices and operates in 19 countries.
http://maxestates.in/#1
Noida | Uttar Pradesh | India
Established in 2016, Max Estates Limited is the real estate arm of the Max Group with the vision to bring the Group’s values of Sevabhav, Excellence and Credibility to the Indian real estate sector. The mission of Max Estates is to offer spaces for residential and commercial use with the utmost attention to detail, design and lifestyle. With a team consisting of engineers, architects, planners and specialists, and collaborations with global leaders in design, master planning, landscape and sustainability, Max Estates is committed to delivering a truly unique quality of excellence and lifestyle to all our customers. Max Estates is a subsidiary of Max Ventures and Industries Limited
+91 22 6669 1000
Mumbai | Maharashtra | India
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 158 countries with more than 2,36,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com In India, PwC has offices in Ahmedabad, Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune. For more information about PwC India’s service offerings, visit www.pwc.com/in PwC refers to the PwC International network and/or one or more of its member firms, each of which is a separate, independent and distinct legal entity. Please see www.pwc.com/structure for further details.
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