Vivek Seal/Pooja Sarkar 
 
Mumbai: The road has just turned rougher for real estate companies, which are in the midst of a bumpy ride. That’s because they are being forced to accommodate the exit of their financial investors in times of intensifying liquidity crunch.

The result: their stock may be sold cheap, or at lower valuations, because of the compulsions, said an analyst with an institutional brokerage, who did not wish to be named citing compliance reasons.

“The REIT market is not fully stable yet, it is still recovering. If companies such DLF are planning to raise a billion dollars, they will not get fair valuation because the market has softened in India, China and Singapore,” he said.

As recently as two weeks back, companies that had received the nod to list their REITs were apprehensive about going ahead.

But now, DLF, India’s top realtor, has revived its Singapore REIT plan because of the “relative stability in the market conditions”, sources familiar with the development told DNA Money.

DLF will file updated papers for a $2 billion IPO with the Singapore authorities next month, they said. Company officials declined to comment.

“By June, DLF will file papers … the markets are getting better now,” the source said.

Analysts said it might bring a “cornerstone investor” —- or an entity that will invest the largest chunk —- with $700 million to $800 million, otherwise getting the desired valuation is impossible.

Rival Indiabulls Real estate is planning to raise $300 million through its Singapore REIT listing. It has filed a prospectus with the Monetary Authority of Singapore for Indiabulls Properties Investment Trust.

Company officials are going to Singapore on Tuesday to thrash out details.

“Indiabulls has quoted a yield of 9.8% to investors. This is way above the benchmark yield in India. But I don’t think overseas investors will get that valuation,” an analyst in the know said.

Ashutosh Limaye, associate director at real estate consultants and brokers Jones Lang La Salle Meghraj, expects developers such as Indiabulls Real Estate, Kalpataru, Hiranandani and Rahejas in Mumbai and Unitech in Delhi to list REITs “very soon” to fund new projects.

The analyst adds, “It is very difficult to raise liquidity so the developers are hoping that from asset class they will get higher rise and better price.”

Niranjan Hiranandani, chairman and founder, Hiranandani Developers, said his company has no plants for a REIT now. “But in near future we will surely list it in Singapore.”

Unitech, which was earlier gung-ho about its REIT plans to raise $700 million had to pull the issue due to its telecom plans.

Analysts said till such time Unitech is able to find a telecom partner overseas, it may not be able to concentrate on REIT.

Source : DNAIndia