Omkar Realtors in talks with KKR arm to raise Rs400 crore

Mumbai: Mumbai-based real estate developer Omkar Realtors and Developers Pvt. Ltd is in talks to raise Rs.400 crore from KKR India Asset Finance Pvt. Ltd, the local arm of global investor Kohlberg Kravis Roberts and Co. LP (KKR), said one person directly familiar with the development and two bankers who met the firm to discuss fund-raising plans.

“They are negotiating the deal and the money is being raised for its luxury residential project in Worli,” said the first person mentioned above.

The project called 1973, spread across 5 million sq. ft and three towers, is still under construction. According to a Mint report on August 2013, the 400 apartments in the 1973 project were being marketed as so-called bespoke sky bungalows (made to the customers’ specifications) of 2,500-18,200 sq. ft and would be priced at between Rs.15 crore and Rs.100 crore.

In an emailed response, KKR said it does not comment on speculation.

Omkar Realtors in an email reply said: “This is mere speculation and we deny any such development on the funding front."

Omkar raised Rs.200 crore from Ajay Piramal-backed real estate fund Indiareit Fund Advisors Pvt. Ltd in 2011 for the 1973 project. The company has raised a total of Rs.500 crore from Indiareit Fund Advisors for four different projects including the 1973 residential towers.

International private equity (PE) funds have become active in providing structured finance to real estate firms over the last few years.

KKR concluded its first real estate lending deal in June 2014, investing Rs.350 crore in Mumbai-based Wadhwa Group’s luxury homes project, called The Address, located in the central suburbs of Mumbai.

According to a report by international property consultancy Cushman and Wakefield in September last year, the first half of calendar year 2014 saw real estate PE investments of approximately Rs.4,100 crore. The total investment in the first half of 2014 was more than double the investment seen in the first half of 2013 at Rs.1,650 crore. The total number of deals in the first half of 2014 had increased to 28, compared with 13 in the first half of 2013, and the average deal size increased by 16% to Rs.146 crore.

Despite the pick-up in deals across real estate firms, the market remains weak.

“There has been a slight price increase in the residential segment across Mumbai, but it is lower than inflation. Residential sales in the high-end category did not witness traction from buyers and developers are now going back and redrawing their plans and launching compact houses with smaller ticket price,” said Ashutosh Limaye, head of research and real estate intelligence services at Jones Lang LaSalle India.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.