Tata Realty and Infrastructure sets up funds for expansion

The company is planning to complete an investment of Rs 3,000 cr in next two-three years in real estate development projects

Tata Realty and Infrastructure (TRIL) is looking at setting up an overseas fund of around $500 million (Rs 2,769 crore, according to current currency rate) and a domestic fund of around Rs 300 crore to support the company's future expansion plans. The company is also scouting for acquisition of retail assets in almost six locations in the country at present, to meet its target for expansion in the recently entered retail business, said a senior executive from TRIL.

The company had backing from the approximately $700-million fund Tata Realty Initiatives Fund 1 (TRIF 1), which is closed at present and plans are to set up another overseas fund to support the commercial and retail asset development for foreign direct investment (FDI)-compliant projects, of over five lakh sq ft of built up area. The domestic fund would be to cater to the investment requirements of projects of lesser size, added Cyrus Engineer, head – sales and marketing, TRIL.

 

Engineer said that the overseas fund primarily is from investors such as sovereign funds and pension funds. The domestic fund would be from private equity players, for which the company is in talks with players including Tata Group's asset management firm.

“Though the size of the funds are yet to be finalised, we expect the overseas fund to be at a size of around $500 million, while the domestic fund would be of around Rs 300 crore,” said Engineer.

The fund would also support the company in its plan to acquire some of the developed retail space for the growth of its retail real estate business. The company is in talks with various players including Tata's own asset management firm for setting up the funds, he added.

“While we are going on with our organic growth plans in retail real estate development, we are also looking at acquisitions in the segment. We target to establish our presence in at least 10 locations by 2015,” he added.

The company is expecting acquisitions to establish presence in around six locations, and major cities inlcuding Mumbai, Chennai, Bangalore and Pune and tier II cities including Coimbatore, Mysore and Ahmedabad are in the radar for acquisition.

The company is planning to complete an investment of around Rs 3,000 crore in next 24-36 months in the real estate development projects, he said.

TRIL's first retail project, a seven lakh sft large scale city centre retail mall, Trilium Amritsar is nearing completion and is expected to start operations by February, 2013. Almost 70 per cent of the project, which is estimated to come up with an investment of around Rs 500 crore, has been leased off already.

Another project, a mix of retail and residential real estate development in Nagpur with an investment of around Rs 650 crore is expected to be completely ready by mid 2015. A commercial office, services office and retail project in Gurgaon is in planning stage, which is expected to complete by end of 2015 with an estimated investment of around Rs 1000 crore. The TRIF 1 has been used in five of TRIL's projects including the IT Special Economic Zone (SEZ) Ramanujam IT City in Chennai, which has been developed through a special purpose vehicle TRIL Infopark Ltd in collaboration with Indian Hotels Company Ltd and Tamil Nadu Industrial Development Corporation (TIDCO).

It has completed almost 70 per cent of the project and the park is expected to start operation by the end of 2014 or early 2015.

The other projects which used the fund include the upcoming Trilium Amritsar, Capitol Hights which includes retail real estate development, the recently announced residential project Tritvam in Kochi and TRIL IT4, a seven lakh sft IT Park the company acquired for around Rs 450 crore in March 2010, said Engineer.