Real Estate News Letter
6th
October– 12th
October, 2014
For private circulation only
CONTENTS
2. Interest Rates
3. Infrastructure
4. Industry News
5. Private Equity News
6. Regulatory Buzz
8. Land
9. Residential
10. Commercial/ Retail
11. Township
12. SEZ
13. Hospitality
14. Input Cost
7. Public Markets
1. Snapshot
Snapshot
Source : NSE
Source : NSE
Note : Data indicates inflation over previous year’s month
Source : Ministry of Commerce and Industry
6.8%
6.3%
7.7%
7.0%
8.6%
6.8% 6.8%
3.9%
2.0%
4.0%
6.0%
8.0%
10.0%
Jan/14 Feb/14 Mar/14 Apr/14 May/14 Jun/14 Jul/14 Aug/14
Per cent
WPI-inflation data (primary articles)
39
51
33 31 34
51
45
31
20
30
40
50
60
07/Oct 08/Oct 09/Oct 10/Oct
Rs billionTrends of FII in equity markets
Buy sell
-1.2
-0.1
1.5
-1.3
-1.0
1.5
2.6
-1.3
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
07/Oct 08/Oct 09/Oct 10/Oct
per centTrends in Nifty and CNX realty index
Nifty CNX REALTY
June 30, 2015.
Repayment for the new loans will be in 360
instalments (224 for principal + 112 for interest +
maximum moratorium of 24 months.) In the case of
existing loans, the original repayment schedule of 168
+ 72 installments will continue.
The Hindu Business Line,06 October ‘2014
Interest Rates
SBI announces revised, liberal
home loan scheme for staff
State Bank of India has revised the housing loan
scheme for employees by incorporating liberal
provisions in terms of maximum limits and expanded
repayment period across categories. The scheme
was last revised in February, 2008. The latest revision
was announced in a corporate circular dated
September 30, 2014.
Group insurance
The new housing loan entitlements were decided on
by a meeting of the executive committee of the central
board held in Mumbai on September 19. The benefit
of revised housing loan scheme will be applicable to
all eligible employees who are on roll as on
September 19. The revised ceiling and interest rates
will be effective immediately to all new loans
sanctioned/ disbursed on or after September 30. The
bank is considering the possibility of covering all new
staff housing loan accounts with a group insurance
policy as an added welfare measure to all employees.
The central board noted that the loan limits fixed six
years ago have lost relevance due to increase in
prices of land and construction materials Employees/
officers have had to resort to borrowing on
commercial rates to complete housing projects or to
acquire ready built-up flats/houses.
Loan conversion
Existing commercial housing loan may be converted
under the new scheme. Option for enhancement of
loans is also allowed to liquidate existing loan, subject
to conditions. On promotion, an employee will be
permitted to draw up the entitlement to the
grade/scale to which he/she is promoted, for repaying
loans taken on commercial/public terms.
The board noted that a number of employees have
raised additional housing loan from the bank at
commercial rates. Such staff members may be
permitted to take the housing loan up to their revised
entitlement for repaying the outstanding housing loan,
subject to conditions. This facility is available only as
a one-time measure and has to be used up before
Centre releases Rs 250 cr to DMRC
for Phase III project
Central Government has released its equity
contribution of Rs 250 crore to the Delhi Metro Rail
Corporation (DMRC) for construction work of Phase
III projects. “We have released an amount of Rs 250
crore to DMRC as part of the Government of India’s
share towards equity for meeting the cost of Delhi
MRTS Phase III projects for the current 2014-2015
year,” said an official of Ministry of Urban
Development. The official said that this amount shall
consist of 25,00,000 shares of face value of Rs 1,000
each.
“The audited statement of account relating to transfer
of this amount of Rs 250 crore to the equity of DMRC
shall be furnished to Urban Development Ministry
after the close of financial year together with a
certificate that the amount has been utilised for the
purpose for which it was sanctioned,” the official said.
He said that a total amount of Rs 7,883.36 crore has
been released earlier as equity to DMRC by Urban
Development Ministry. A month-and-a-half back,
Delhi Government had also released its equity
contribution of Rs 200 crore to DMRC for construction
work of Phase III projects with some “strict” terms and
conditions.
“Interest earned on equity before issue of shares, if
any, would be adjusted against the contribution of
Delhi Government. Besides, DMRC would ensure
time-bound progress of the project. It would also
furnish monthly physical and financial progress to
transport, planning and Finance Department,” Delhi
Government had said while releasing fund to DMRC.
The Pioneer,07 October ‘2014,New Delhi
Infrastructure
ECR to be 4-lane expressway
A year and a half from now, you could be zipping on a
four-lane East Coast Road.The state government
plans to complete four-laning of a 33.5-km section
between Akarai and Mamallapuram by March 2016.
With encroachments removed on the left of the road
heading to Mamallapuram, Tamil Nadu Road
Development Corporation (TNRDC) has started road
laying on the stretch. "Only small hindrances like
electric posts now remain," a TNRDC engineer said.
"Everything else has been demolished and we have
started widening 7km of the road."
On the right of the highway, several people have built
shops despite the government acquiring land several
years ago. "We are assessing the situation now and
will mostly start demolishing the illegal structures
within 15 days," the engineer said. Only around 5% of
the Rs 272.1 crore project has been completed so far.
"Removing encroachments is the biggest challenge.
When that is done, road-laying can be follow quickly,"
the engineer said.
When the stretch is widened from two-lane to four-
lane, nine of 13 curves on the road will automatically
be straightened. The 9.5-metre-wide road will be
widened to 23.5 metres. Officials of TNRDC say traffic
will be able to move much faster and road safety will
improve when the road is a four-lane expressway.
"The curves in the road currently are designed for a
maximum speed of 40kmph," the engineer said.
Alongside the road widening, the TNRDC will also
construct a median on the stretch, to prevent head-on
collisions, the primary causes of fatal accidents on the
highway. Officials of TNRDC said Rs 8.42 crore has
been set aside for streetlights. The project includes the
construction of 19 box culverts and a major bridge at
Muttukadu. One bridge in each direction will come on
either side of the existing bridge. "There will be a 1m
gap between the new bridge and the old one. The new
one will also be about 3 metres higher than the old
one," the engineer said. "While the old one will be
abandoned, it won't be demolished for now."
The Times of India,06 October ‘2014,Chennai
manufacturing. Also, issues like the Vodafone (tax)
controversy, transfer pricing and settlement issues
are expected to be dealt in a sane manner as the
Government has started addressing them accurately.
If we can have a growth rate of about 7 per cent, most
of the sectors will start performing well. We believe
the real estate industry is doing better in the overall
economy, so if GDP grows 6 per cent we should grow
9 per cent.
Do you think the Real Estate Investment Trust
(REIT) announced in the Union Budget will be
beneficial for the sector?
There will be misgivings as well as challenges as far
as the REIT structure is concerned. If someone wants
to play safe and invest in commercial assets, for
example International Tech Park in Bangalore, you
can see there is complete transparency with a near
full occupancy for the last 10 years. So, how things
will pan out only time will be able to tell, but one
cannot deny the fact that this is the first and critical
step in the right direction.
Can you tell us how have you managed the
company’s cash flows?
The investment graph of our company shows that we
have an annual cash flow of around Rs.2,800 crore
now. We have constantly improved our project profile,
area profile, launch profile and this has been possible
by keeping an eye on overall debt. This year, we are
doing things differently. We have started using the
available resources to a greater advantage by getting
certain opportunities like investing over Rs.100 crore
in Pune, Rs.170 crore in Kochi along with
Purvankara.
In the coming months, there will be more
opportunities and we should be able to improve as
well as keep debt under control. Today, we are able
to raise the debt at around 12 per cent, whereas in
the market rates are as high as 13-15 per cent and in
some cases, between 17 and 18 per cent. As far as
funds are concerned, 61 per cent is company-funded
assets and the rest is from the banks. The total debt
was around Rs.1,500 crore as on June 30 and last
year it was around Rs.1,300 crore.
The Hindu Business Line,06 October ‘2014,Mumbai
Industry News
‘If GDP expands 6%, real estate will
grow 9%’
Real estate player Sobha Ltd has had a tepid first-
quarter because of the slowdown in the economy. It,
however, expects to do better as it believes the “feel
good factor” among investors is back. In an interview
with BusinessLine, Sobha’s Vice-Chairman and
Managing Director JC Sharma shares the company’s
plans to pare debt and boost growth.
How has the first quarter been and the second
shaping up for the company?
It won’t be as good as the subsequent quarter, but we
believe the kind of presence we have and the (project)
pipeline will sort out the things. Eventually, we expect
to do well. For the next few quarters, we expect to see
improvement, though we know this improvement is
more due to the sentiment part, and the feel good
factor.
What about demand for the company’s projects?
I believe that from June onwards, there has been a
good improvement in Bangalore. We have reasonable
presence in Kerala, which too has seen an
improvement. Pune is also good for us, though the
NCR (national capital region) still remains challenging.
Overall, the coming quarters should be better.
Can you share with us city-wise contribution to
your top line?
Bangalore contributes between 30-35 per cent, though
it was 40 per cent last quarter. Earlier, Bangalore
contributed 50-55 per cent. But there have been
occasions when NCR contributed as high as 70 per
cent. But Bangalore has been a consistent performing
market in real estate for India as well as for Sobha.
What is the outlook for the next few quarters for
Sobha?
We expect to perform better (in the coming quarters)
as the market too is expected to perform better. There
has to be an improvement in investment cycle in India
as most companies have stopped investing. There is a
need of that investment cycle to start again and the
manufacturing process must be seen at the ground
level. India is booming with the excellence in
A realty firm from the NCR, CHD Developers, has
come out with festival offers under three categories -
existing client base, prospective buyers and
influencers. "For the existing customers, we are
offering one per cent discount on payment received
on or before time on EMIs (equated monthly
instalments). Besides, a three to four per cent
discount across all properties for a purchase made
during the festive season," said Ravi Saund, its head
of operations.
For channel partners, CHD is arranging foreign trips
for sale conversion target achievements and offering
a flat commission to influencers other than a non-
sales person, whose referral would lead to conversion
of a unit sale.
Brotin Banerjee, managing director, Tata Housing,
says: "Due to the recovering economy, there is some
improvement, resulting in an increase in enquiries.
Also, there is stability in prices over the past few
quarters. The stability in the market has resulted in
buyers coming forward in this festive season to
purchase their dream homes. We believe the
economy should completely recover by the first
quarter of next year."
However, despite the increased marketing activities
by developers, many experts feel a revival in the
sector is at least a year away. "Investors are still
shying away from coming in the realty market. Unless
the market starts picking up, which is expected by
next year-end, and all economic parameters are
moving in the right direction, it will be difficult to
attract investors (who look for appreciation in the
property in the short to long term)," says Magazine.
Over recent years, the realty market has been
witnessing a slowdown. Declining sales, high
inventory and a fund crunch have marked the past
two years for real estate developers, now banking on
the festival season to push up sales and give a
momentum to the sector.
Business Standard,06 October ‘2014,New Delhi
Industry News
Raining discounts for property
buyers this season
The realty market has been abuzz with activity this
festival season. Discounts, freebies, various financing
schemes and advertisements across various media
are making buyers sit up and look for the best deal.
On the back of positive sentiment, developers are
even going ahead with new launches, in contrast to
hardly any new projects in the past two years. This
was mainly due to an economic slowdown and a need
to clear the backlog. As many as 100 new launches
have been planned this season, mainly in the National
Capital Region (NCR), Mumbai, Bangalore and Pune.
One developer, Lotus Greens, launched four projects
on the same late last month, with an investment of Rs
4,400 crore.
This festival period from October to December is
expected to garner sales of at least 60,000 units
across seven major cities, almost double that recorded
in the past two years. Average annual sales are
expected to reach 200,000 units this year, with a good
festival season contributing 30-40 per cent to the total.
In the past two years, sales were 120,000-140,000
units annually, with very few of those during the festival
season, according to sector estimates.
"This time (festival season) has created a buzz. This
will definitely encourage more people to come and
invest in the real estate. And, there is more on the
supply side as well, with so many new launches. The
activity on the ground will improve and this a good time
for end-users to enter the market," said Anshuman
Magazine, chairman and managing director, CBRE
South Asia.
Developers and brokers are giving discounts in the
range of eight to 12 per cent, along with offers such as
free parking space or club membership, beside free
LEDs, iPhones and gold coins, along with a chance to
win tickets to a foreign trip.
Many developers are also offering schemes wherein
one pays 10/20 per cent upfront at booking and rest at
the time of possession. In between, the buyer pays no
monthly installments.
Big realty sets sights on Port City
The Port City's newfound status as Andhra Pradesh's
largest city seems to be attracting national realtors to
its shores. In fact, if realty industry sources are to be
believed, several national players, including the likes
of Indiabulls, Emami Realty Apex Group, Aditya
Construction Company and NorthStar Apartments,
have already charted out a foray with housing
projects in the city. So far, the Vizag market has been
catered to primarily by local players.
At the same time, Shriram Properties, which has
already begun construction on an 80-acre plot, is also
planning to launch a mega Presidential Tower project
at Madhurawada comprising nearly 15 towers of 20-
25 storeys with two units on each floor. According to
Shriram Properties senior marketing manager Ravi
Shankar, the premium project will comprise duplex
and triplex apartments with a built-up area of around
4,000 sqft and 6,000 sqft, respectively.
Sources said that Lansum Estates is also
constructing 35-storeyed residential twin towers,
which is expected to be the tallest residential complex
in Vizag. The project will have 650 flats spread over
an area of 4.2 acres in Seethammadhara.
Realty sources said that Indiabulls group is also
constructing around 500 flats in Madhurawada over
an area of 4.5 acres. Sources added that Aditya
Construction Company, which is constructing housing
projects comprising around 300 flats at Madhurawada
and Rushikonda, is also planning to take up another
400-flat project in Madhurawada. Also, NorthStar
Homes, which has various projects in Hyderabad, is
taking up the construction of a 150-apartment housing
project in MVP Colony.
While market sources indicated that Emami Realty
has clinched a deal for 20 acres near Madhurawada,
a spokesperson for the firm dismissed it as a rumour.
However, the spokesperson said that the company
feels Vizag is one of the cities offering a huge
potential as it is an industrial base and that the
company would consider looking at Vizag if there
were suitable opportunities.
Industry News
Less than a lakh applicants so far
for DDA scheme
With just three working days to go for the Delhi
Development Authority’s (DDA) housing scheme 2014
to close, less than one lakh applications has been
received by the land development agency till Saturday.
The housing scheme 2014, with 25,034 flats on offer,
is DDA’s biggest scheme till date but with the figures
that have emerged till now, it might go down as the
scheme that got the poorest response.
In the 2010 housing scheme of DDA, about 16,000
flats were on offer and the number of applications that
came was 7.4 lakh. For the latest scheme, while the
number of flats is much more, the number of
applications received till the last working day was just
92,000. Unless there is an unprecedented rush for
filing forms in the last three working days beginning
Tuesday, it seems unlikely the response this time
would be anywhere near the 2010 scheme figures.
“We have sold more than 16 lakh forms through our
office counters and bank branches and we expect a
large number of these to be filled and submitted but the
response till now has been very poor,” said a senior
DDA official who didn’t wish to be named. One major
reason, according to DDA officials, is the clause of a
five year lock-in period introduced for the first time.
According to the clause, the flats wouldn’t be
registered in the name of the allottee till five years from
the date of possession. The idea is to keep speculators
at bay and encourage only those who want to live in
their allotted flats.
“It appears that speculators and people who want to
get a DDA flat only for investment purposes are
keeping away from applying as most people do not
want to park their money for five years,” said the
official. Though the total number of flats is the biggest
offered by DDA ever, the lion’s share of it — 22,627 —
consists of one bedroom flats. Number of three
bedroom flats is just 21 and that of two bedroom flats
is 561.
Hindustan Times,06 October ‘2014,New Delhi
markets have launched subvention schemes in
existing projects to perk up the demand.
Only 27 new projects were launched this September
across the top 15 cities against 279 in the same
month last year, according to PropEquity. "There is
too much existing inventory waiting to be sold," said
Samir Jasuja, managing director at PropEquity.
Santhosh Kumar, chief executive-operations, at
property advisory firm JLL, said there is not enough
confidence among developers to launch new projects.
"Sales during the festive season are much lower than
expectation," he said.
Brokers say many buyers are making enquiries, but
sales are still not happening at the pace that is
usually associated with the festive period. Abhishek
Anand of Noida-based brokerage KR Associates said
his firm had sold 40-50 apartments every week during
the 2012 festive period, but now they are hardly able
to sell five. "Buyers are still a scared lot," he added.
But with the job growth data for the quarter to
September reflecting a two-year high, some builders
see a revival in the real estate market by the end of
March. "The sentiments have started to change, but it
will take time for sales to come back," said Arora of
Supertech.
Sanjeev Srivastava, managing director of Assotech
Developers, said this is just the beginning and sales
may pick up over the next few months. "Sales might
not be up to the mark now, but things are improving
fast," he said.
Demand for homes is also expected to improve on
the back of higher office-leasing activity across the
country in the last two quarters, which would mean
creation of more jobs. Several large office-lease deals
were signed in the past few months.
According to an informal survey of top property
consultancies in India, top corporates across sectors
are looking to lease over 40 million sq ft of space in
the top seven cities over the next 12-18 months.
The Economic Times,08 October ‘2014,New Delhi
Industry News
With the US government offering to extend support for
turning Vizag into a smart city and the state
government planning to make it into an IT hub, realty
sources expect many other construction giants to troop
in to tap the city's potential. "Vizag is going to be a hub
of activity in the next three to five years, with several IT
companies slated to set up base in the city thanks to
the initiatives being taken by the state government.
Moreover, Vizag will also be the financial capital of the
new state, so it makes all the more sense for realty
houses to tap the market before it becomes too
pricey," said a developer.
"The city is also going to gain from the Vizag-Chennai
industrial corridor and slowly but surely land prices are
set to rise in the coming days. If construction
companies are late in seizing the opportunity, it will be
very difficult for them to offer competitive prices in the
market," said the manager of another construction
company.
The Times of India,07 October ‘2014,Hyderabad
Real estate market cold as realtors
fail to woo customers this festive
season
The festive season has failed to bring cheer to the real
estate market, with builders and brokers reporting
"notso-encouraging" sales over the past two weeks.
Unlike the boom years, builders this year had resisted
the temptation to launch new projects in the season,
focussing instead on reducing the inventory that has
piled up over the past few quarters.
According to property research firm Liases Foras,
there were about 7.6 lakh unsold apartments across
India at the end of June. "There isn't such a big boost.
The festive season is not so encouraging this year,
despite the offers," said RK Arora, managing director
at Noida-based real estate firm Supertech. "But we are
hoping for a turnaround soon.“The company has
launched a festive season scheme for its existing
projects in Noida, where buyers can pay 10% at the
time of booking and the rest on possession. Real
estate market cold as realtors fail to woo customers
this festive seasonSeveral other builders across
about the smart city concept.
“Companies push the concept based on their agenda
and there is no holistic view,” said Ashwin Mahesh,
CEO of Mapunity, which builds GIS and mobile
technologies for government departments.India
currently has 360 million people living in cities and
this number is expected to double by 2030, which is
expected to put pressure on resources such as water
and electricity, according to a report released by CII
and PwC.
The Hindu Business Line,09 October ‘2014,Bangalore
Industry News
Centre, States divided over concept
of ‘smart city’
In what could be a standoff similar to the GST rollout,
the Central and State governments are divided over
the implementation of smart city projects. Addressing
businessmen at a conference organised by CII on
‘Infrastructure and Technology Opportunities in Smart
Cities,’ Karnataka government officials pointed out that
the concept of smart city should be looked into more
closely from a physical infrastructure point of view,
rather than implementing technology to manage traffic
or put in fancy e-toilets.
Reservations
“First, there is a need to improve physical
infrastructure, then comes the rest,” said Roshan Baig,
Minister for Infrastructure, Karnataka. Vandita Sharma,
Principal Secretary, Infrastructure Development
Department, Karnataka, added that the government
will not use technology just for the sake of it, unless a
large number of people can afford to use it.
The officials maintained that it is a State subject and
the Centre, unless it is funding these projects, should
not dictate terms. Also, there are differences of opinion
among stakeholders on the definition of ‘smart city’ and
whether it should be a public-private partnership (PPP)
or completely private initiative.
“Many of India’s growing cities are suffering from years
of inadequate investment in infrastructure and it is time
the government remedies the situation,” said
Mohandas Pai, Chairman, Manipal Education
Services. Some stakeholders pointed out that a
framework is needed for implementing ‘smart city’
projects and making it work for a large number of
people.
“We need to work on a sustainable roadmap, which
should be come under the purview of an urban
services regulator,” said V Ravichandar, Chairman,
Feedback Consulting.
Lack of clarity
Industry watchers also believe that not only the
government but even the private sector is not clear
Realty player Amit Enterprises in
talks to raise Rs 100-150 crore
Pune-based real estate developer Amit Enterprises
Housing Ltd is in talks with three to four fund houses
to raise Rs 100-150 crore as it prepares to launch
five projects in the next three months, said senior
officials. The company today announced the launch
of its affordable residential project ‘Astonia Classic’ at
Undri in Pune.
“There is lot of interest from investors to invest in
real-estate. We are in talks with atleast two to four
funds. These are investments for specific projects.
The talks are at advance stages and we are yet to
decide on the fund houses,” said Kishor Pate,
chairman and MD, Amit Enterprises Housing.The
company has lined up five projects for launch in the
next six months that include locations like Sahkar
Nagar, Ambegaon, Punawale and Baner Road in
Pune along with a premium residential project at
Prabhadevi in Mumbai. It already has a township of
2,000 plus homes under construction in Nashik. It
has a total land bank of 400-450 acres. Of this about
200 acres is in Kalyan.
In 2010, Ask Group, a private equity firm, had
invested Rs 30 crore in Amit Enterprises project in
Baner area.They are looking for an exit,” added Pate.
Amit enterprises that has developed a total of 4
million square feet of propert in the last 31 years, has
plans to construct over 7,000 plus homes in the next
five years that involves construction of over 8 millions
square feet. The Astonia Classic project is spread
over 15 acres and will have 12 towers. The project
will have only two-bedroom flats with 905 square feet
area. As a special launch offer, the company is
providing an all inclusive price of Rs 50 lakh for the
first 100 customers.
“We see a huge opportunity in the affordable housing
segment. Most of the projects that are being
launched are in the category of Rs 1 crore and above
and in that segment sales to take some time as the
client is different. But in the affordable housing
scheme especially in the Rs 50-75 lakh range we
have not seen any demand-supply issue,” said Pate.
Private Equity News
US private equity firm Kohlberg
Kravis Roberts to invest Rs 750
crore in 2 realty projects in metros
US private equity firm Kohlberg Kravis Roberts & Co
has made its entry in the country's real estate sector by
finalising investments of Rs 750 crore in two property
projects. KKR has struck a structured debt transaction
for Rs 400 crore for the Bhartiya Group's integrated
township project in Bangalore, two people with direct
knowledge of the transactions said.
It also agreed to provide a Rs 350 crore structured
loan to the Wadhwa Group's luxury home project in
west central Mumbai, they said. The group will use the
money to repay other lenders of the project, where the
cost of apartments ranges from Rs 1.5 crore to Rs 10
crore. The Bhartiya Group plans to invest Rs 10,000
crore in the township project, which includes houses in
various formats, an IT zone and a shopping district.
The project, which will come up on 125 acres of land in
north Bangalore, will be developed over 7-10 years.
"These two investments represent KKR's commitment
to participate in India's long-term growth story for the
sector. The idea is to do investments in a calibrated
manner with high quality partners," one of the people
said.
It also agreed to provide a Rs 350 crore structured
loan to the Wadhwa Group's luxury home project in
west central Mumbai, they said. The group will use the
money to repay other lenders of the project, where the
cost of apartments ranges from Rs 1.5 crore to Rs 10
crore."These two investments represent KKR's
commitment to participate in India's long-term growth
story for the sector. The idea is to do investments in a
calibrated manner with high quality partners," one of
the people said. The focus on the Indian real estate
market comes after KKR's broader plan to move
beyond leveraged buyouts worldwide. Ralph
Rosenberg, a real estate industry veteran who was
previously a partner at Goldman Sachs Group, joined
KKR in 2011 as the global head of its real estate
platform.
The Economic Times,06 October ‘2014,Mumbai
developer is close to completing construction of
phase I of the project and is in advanced stage of
construction of phase II."The loan disbursement will
be made in tranches linked to the progress of
construction, while repayment is expected to be
completed in 30 monthly installments starting from
March 2017," said one of the people quoted earlier.
The Economic Times,08 October ‘2014,Mumbai
ASK to launch its fourth real estate
fund
ASK Property Investment Advisors, the real-estate
private equity arm of ASK Group, announced on
Wednesday the launch of its fourth real estate fund -
ASK Real Estate Special Opportunities Fund II, which
aims at raising Rs 1,500 crore. The fund will invest
predominantly in self-liquidating residential projects in
six major cities — Mumbai, Pune, Chennai,
Bangalore, Delhi-NCR and Hyderabad. The fund
raising for the ASK Real Estate Special Opportunities
Fund II will be open for a year, an official from ASK
Group said.
Currently, ASK Group manages Rs 2,100 crore of
real estate assets under management. With the
launch of Rs 1,500 crore real estate fund, it will be
aiming for Rs 4,000 crore of real estate assets, the
company said in a release. Sunil Rohokale, MD &
CEO, ASK Group said, “Our previous real estate
funds have generated superior returns during tough
times. This has encouraged us to launch a larger
fund considering the opportunities in the markets and
investors are willing to invest with a group that has a
focused investment strategy with impeccable track
record. We intend to raise this through domestic
institutions and high net-worth individuals.”
“Our ability to repeat deals with existing partners has
been a differentiator reflecting our understanding and
strong relationships,” Rohokale said. Amit Bhagat,
MD & CEO, ASK Property Investment Advisors,
said,“our focused strategy of mid-segment residential
projects and partnering with regionally strong reputed
developers has been appreciated by investors.
Investors have appreciated our risk management
Private Equity News
The possession for all the flats in the Astonia Classic
project will be done in two years. “We have already
booked 200 flats, now we are opening up our
marketing channel,” added Rohan Pate, director, Amit
Enterprises.
The company is also looking for redevelopment
projects in Pune city area. “We have done a lot of
redevelopment projects in the Pune city area in the
past. Some of our projects itself are completing 20-25
years and several people have approached us. We
may soon announce are foray again in this segment,”
added Kishor Pate. The company which has about 35
acre land in Hinjewadi, a fast developing IT hub, may
also look at developing a IT park.
Business Standard,07 October ‘2014,Pune
ICICI Bank-led consortium inks deal
with Wadhwa Group
A consortium led by ICICI Bank entered into a
milestone debt funding agreement with realty
developer Wadhwa Group and its joint venture partner
for around Rs 450 crore.The construction finance,
carrying nearly 14% borrowing cost, is for a 12-acre
residential project in Mulund, a suburb of Mumbai, said
two people familiar with the development. The
consortium has already disbursed Rs 150 crore to the
developer under the agreement, which was signed last
week.
The project is being developed as a joint venture
between Wadhwa Group and another realty developer
that owned the land parcel on LBS Marg between
Nahur and Mulund. The project has an estimated
saleable space of 1.5 million sq ft. Construction is
scheduled to start in January. The consortium led by
ICICI Bank also includes ICICI Home Finance
Company. An email query to ICICI Bank did not elicit
any response.
A spokesperson of Wadhwa Group also declined to
comment. Recently, US private equity major KKR
entered into an agreement to invest in Wadhwa
Group's 18-acre high-end residential project, The
Address, at Ghatkopar suburb of Mumbai. The
Private Equity News
combined with margin of safety yielding multiple of
capital. We have demonstrated track record of 15
performing investments in five cities.”
The Group has successfully raised two domestic funds
and an offshore fund. ASK Real Estate Funds has
already announced first exit with a multiple of 2.45 in
just over 2 years and second with a multiple of 2.35 in
Pune in just over 3 years. ASK Group manages assets
of more than US $1 billion of its clients in equity
PMS(portfolio management services), wealth advisory
and real estate PMS, the company said.
Financial Chronicle,09 October ‘2014,Mumbai
Building construction norms to be
simplified in 3 months
The urban development ministry has set a three-
month deadline to notify simplified rules for obtaining
sanctions for building construction in Delhi.
In an official statement, the ministry on Tuesday said
that the proposed Unified Building Bylaws, which
seeks to speed up grant of sanctions, will be now be
put in the public domain so that citizens can share
their suggestions.
The decision was taken following a direction from
urban development minister Venkaiah Naidu for early
notification of simplified and user-friendly building
bylaws in place of the current bylaws, which have
been in force since 1983.
Under the existing building bylaws, sanctions for
building construction take more than the stipulated 60
days owing to the complex procedures,
documentations, rules and their open ended
interpretation. "The present norms are so complex
that the common man often ends up facing more
problems and government officials have greater
liberty to interpret them. The idea is to put all of them
under one category and make the provisions clear for
easy understanding and interpretation," an urban
development ministry official said.
People can send their views in the next two weeks.
Thereafter, a consultative workshop will be organized
involving all stakeholders including experts, architects
and citizen bodies before notifying the final building
by-laws.
The proposed building by-laws also intend to
incentivize green and energy efficient construction. "A
simple and self-explanatory version of bylaws along
with simplified proformas is intended to be made
available which facilitates easy interpretation. Self
sanction by architects and electronic processing of
sanctions by the local authorities are sought to be
provided," an official release said.
The Times of India,08 October ‘2014,New Delhi
Regulatory Buzz
Reits may not get complete pass-
through status
Contrary to a promise made in the Budget for 2014-15,
the proposed real estate investment trusts (Reits)
might not get a full pass-through status. Reits are listed
entities investing in income-producing real estate
assets, the earnings of which are mostly distributed to
shareholders. While Budget 2014-15 had announced
pass-through status for these trusts, the Securities and
Exchange Board of India (Sebi) announced the
guidelines for Reits late last month.
Pass-through status means taxes on the income
distributed by Reits to unit holders will be paid by unit
holders and not the Reits. This was one of the major
demands of those interested in coming out with Reits.
However, tax experts say a complete pass-through
status has not been given to the trusts for the purpose
of taxation. Provision for tax on Reits is contained in
the Finance Bill, 2014.
Hemal Mehta, senior director, Deloitte India, explained
the Sebi norms allow Reits to either acquire the shares
held in a special purpose vehicle (SPV) by the
developer or acquire the real estate asset directly
under the trust. If a developer transfers shares held in
an SPV to a Reit, capital gains tax would not be
immediately applicable.
The developer would be liable to pay when he sells
units of the Reit to investors, which may be retail
investors on a stock exchange. At this time, capital
gains tax would be payable by the developer on sale
price of units minus indexed cost of holding of shares
in the SPV.
If it is interest on units, then the SPV will pass it to the
Reit, which will cut the withholding tax - 10 per cent in
case of resident Indians and five per cent in case of
non-residents. The unit holders will pay tax on such
interest depending on their income slab and take credit
of withholding tax. Non-resident will pay according to
rules in his country, but nothing further in India. In this
case, it is a some sort of a pass-through.
Business Standard,06 October ‘2014,New Delhi
Public Markets
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Land
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will have a built up space of 4,000 sq ft.
According to managing director M Narsaiah, the
project, work for which is already underway, will be
ready in about two years. The villas will cost Rs 4
crore. The location of the project, close to the work
hubs at Gachibowli in Hyderabad, will enable the
developers to target the business community and the
top management of the workforce nearby. The units
can be booked by paying about 25 per cent in three
months the balance as per progress of the project.
The booking advance is Rs 5 lakh.
The project will be vastu compliant and will have
round the clock water supply, centralised security
system, solar power and generator back-up. There
will also be ample parking facilities, mini theatres,
cafetaria, facilities for indoor and outdoor games, fully
equipped gym, a multi-purpose hall, party lawns,
library, guest rooms, conference rooms and
meditation hall among others, said Narsaiah.The
project will also have a yoga studio, waiting lounges,
spa and massage centre, swimming pool, children
play area, hobby centre as well as landscaped
gardens, he said. According to Narsaiah, the real
estate market conditions are improving and the
demand for highend residential projects are on the
rise.
Financial Chronicle,09 October ‘2014,Hyderabad
Mahindra Lifespace unveils
affordable housing project in
Mumbai
Mahindra Lifespace Developers, the real estate arm
of Mahindra Group, today launched its second
affordable housing project under its ‘Happinest’
vertical at Boisar near here. “Our intent is to provide
good quality housing at affordable rates. We have
decided to undertake two pilot projects — one in
Chennai, which we have already launched in August
and the second one is in Boisar (in Maharashtra),”
company’s Managing Director and CEO Anita
Arjundas told reporters here.
Residential
Godrej Properties adds new
housing project in Mumbai
Realty firm Godrej Properties Ltd today said it has
entered into an agreement with a land owner to
develop an affordable housing project near Mumbai.
The project will have 1.3 million sq ft of saleable area.
“Godrej Properties has entered into a development
management agreement to develop a property situated
in Badlapur, Mumbai Metropolitan Region. It will be
developed as an affordable housing project,” Godrej
Properties said in a statement.
Godrej Properties is the real estate arm of the Godrej
Group. “We are happy to add this new project in
Badlapur, which strengthens our development portfolio
in Mumbai. We will seek to ensure that this project
delivers an outstanding lifestyle for all its residents,”
company’s Managing Director & CEO, Pirojsha Godrej
said. odrej Properties is currently developing
residential, commercial and township projects spread
across 103 million square feet in 12 cities.
Mumbai-based Godrej Properties posted 16 per cent
increase in its consolidated net profit to Rs. 45.61 crore
for the quarter ended June against Rs. 39.47 crore in
the year-ago period. Total income rose by 49 per cent
to Rs. 363 crore in the first quarter of this fiscal
compared with Rs. 244 crore in the corresponding
period of previous year.
During the quarter ended June, Godrej Properties’
sales bookings rose to Rs. 824 crore from Rs. 606
crore in the year-ago period. In volume terms, sales
bookings increased to 1.09 million sq ft from 0.6 million
sq ft during the period under review.
The Hindu Business Line,07 October ‘2014,New Delhi
Shantha launches luxury villa
project near Hyderabad
Shantha Sriram constructions has announced a luxury
villa project — Spring Villas — at Manikonda near
Gachibowli. The gated community project will have
limited number of villas built in 325 sq yds. Each unit
Residential
The company, this year in June, had launched a new
business vertical called ‘Happinest’, focused on
developing affordable housing projects.
Spread across over 14 acres, the Boisar project offers
1RK, 1 and 2 BHK apartments in the range of 351 sqft
to 695 sqft and would have a total of 1,400 units. The
apartments will be priced between Rs. 9.1 lakh to Rs.
17.5 lakh. In the first phase, where construction will
commence from next week and is scheduled to be
completed in a year, the company will build nearly 359
units.
When asked whether the company is looking at other
locations to launch similar projects, Arjundas said,
“There is a huge demand for affordable housing. We
are evaluating opportunities and we may come up with
such projects in Maharashtra itself considering the
increasing demand for affordable housing and
development of infrastructure and industries in the
state.”
The company expects the business to contribute
nearly 20—25 per cent of its revenues in the next few
years. ‘Happinest’ endeavours to meet the housing
needs of families with current combined monthly
income of Rs. 20,000 to Rs. 40,000, Arjundas said.
The company has tied up with credit scoring agencies
like Inventure and micro home finance companies like
Mahindra Finance and Muthoot to reach out to right
customers.
The Hindu Business Line,10 October ‘2014,Mumbai
manufacturing and services sectors is expected to
help resuscitate demand for corporate office space in
the forthcoming quarters.” Bangalore, the IT hub of
the country, has seen 16 transactions in the one lakh
sq.ft and above category in the first six months of
2014, leasing out a total of 36.9 lakh square feet
office space. Hyderabad has seen five deals with 7.47
lakh square feet leased out in the first half of the year,
data sourced from global property consultant DTZ
reveals.
“E-commerce is taking a large share of the office pie
as companies foresee rapid growth in their
businesses in the next few years,” says Satish BN,
executive director (south), Knight Frank India. Apart
from the positive sentiment that is riding high on India
Inc post a stable government at the Centre,
infrastructure development in terms of metros, roads
and ports is expected to prove a shot in the arm for
commercial leasing activity, especially in cities that
have not seen much growth in commercial space off-
take like Kolkata and Hyderabad.
“Demand for office space in Kolkata is slowly picking
up post June. High quality education institutes and
healthcare facilities, along with educated skilled
labour, port, road and air connectivity, is driving
demand in city’s commercial real estate,” says
Surekha Bihani, transactions head (Kolkata), Jones
Lang LaSalle India. The IT/ITeS segment is likely to
remain the major contributor to Kolkata’s overall office
space absorption, while significant supply addition is
expected in the peripheral locations of Rajarhat and
Salt Lake by end-2014, CBRE notes in a July 2014
report.
As for Hyderabad, IT corridors of Gachobowli and
Madhapur are seeing an increase in leasing activity
post the resolution of the Telangana issue, says
Satish of Knight Frank.Moreover, the rents when
compared to Mumbai or Delhi are low in other Indian
cities, which aids in cost control. In Mumbai and
Delhi, too, it is the peripheral business districts in the
suburbs that are seeing absorption in office space
due to competitive rentals. Ravi Ahuja, executive
director, Cushman and Wakefield India, says:
“Sectors like e-commerce operate on a high volume
less margin model, so rents play an important role in
Commercial/ Retail
Ground realty: Small cities lap up
office space
With high rentals, Mumbai and Delhi are losing out on
demand for office space, while cities like Bangalore,
Hyderabad, Kolkata and Pune are gaining currency.
Looking for large spaces, e-commerce, telecom and
IT/ITeS firms are preferring to set up base in cities that
can offer both space as well as lower rentals. Over the
past year or so, Accenture, SAP and Morgan Stanley
have leased out between 1-2 lakh square feet (sq ft)
spaces each in Bangalore. Pune, of late, has seen
some good traction in commercial and office space
leasing.
According to Jones Lang LaSalle India, Pune saw
approximately 4.7 million sq ft of Grade A office space
leased in 2013, garnering a share of 17.4% in the total
commercial/office space leasing in India. Earlier this
year, US-based supply chain solutions company
Flextronics leased 1.08 lakh sq ft space in the city,
which has become home to a number of multi-
nationals like Barclays, AXA, Calsoft and HSBC, to
name a few.
Capgemini, Symantec Space, UHG, Karvy are some
companies that have leased large office spaces in
Hyderabad, while British Telecom and Jacobs
Engineering leased 50,000 sq ft space each in Kolkata
recently. Among big names back home, Reliance Jio is
understood to have picked up a total of 1.15 lakh
square feet space between two offices in Kolkata’s
upcoming business district of Rajarhat and Salt Lake
Sector V area.
Home-grown e-commerce firms Flipkart, Snapdeal and
Jabong are all said to be looking for large
commercial/office spaces. Flipkart is said to be looking
to lease one million square feet space in Bangalore.
The company reportedly plans to lease 3-4 lakh sq ft in
the first year and the balance over the next two to three
years. The industry is estimating that requirement of
the other two companies is also likely to be in the
range of 0.5 to one million sq ft.
Said Anshuman Magazine, chairman and managing
director, CBRE South Asia, “Rejuvenating the
checks, Blackstone has managed a slew of
acquisitions this year.
In September, Blackstone bought two properties—a
special economic zone (SEZ) in Pune and an
information technology (IT) park in Noida—from IDFC
Alternatives Ltd, the PE arm of IDFC Ltd, for Rs.1,100
crore. Noida also happens to be the fund’s first
investment in the National Capital Region (Delhi and
its environs), and it is now also looking at another
transaction there.
In September, Blackstone committed Rs.200 crore for
a 50% stake in a 6.5 acre project in Bangalore that
will have a Four Seasons hotel and luxury homes.
Blackstone, with its partner Embassy Property
Developments Pvt. Ltd, bought it from Goldman
Sachs Group Inc. and real estate firm Century Real
Estate Holdings Pvt. Ltd.
In April, it invested Rs.550 crore to acquire a 60%
stake in Vrindavan Tech Village, an SEZ in
Bangalore, to be developed by Embassy Property
which invested Rs.450 crore. In another large
transaction, Blackstone, along with Pune-based
developer Panchshil Realty, acquired Express
Towers, a well-known office building in Mumbai’s
oldest business district, Nariman Point.
It also invested in Ozone Group’s residential project
in Chennai, where it bought inventory worth Rs.175
crore. Blackstone’s presence and its massive portfolio
in India is particularly relevant at a time when India
has approved the entry of real estate investment
trusts (REITs), allowing an exit route for large rental
portfolio owners.
Live Mint,09 October ‘2014,Bangalore
Commercial/ Retail
their costs.” Ahuja says these companies do not
require fancy front offices, but instead large
warehousing spaces and efficient supply chain
networks, so they are looking for locations that do not
command high rents, but can provide with good call
quality and broadband networks.
The Financial Express,06 October ‘2014,Mumbai
Blackstone set to become India’s
largest office assets owner
Blackstone has acquired 29 million sq. ft of office
space in cities such as Bangalore, Pune, Mumbai and
Noida, on the outskirts of New Delhi. This includes 26
million sq. ft of operational, leased-out space and three
million sq. ft under construction, said people familiar
with the development. To be sure, Blackstone doesn’t
own a 100% stake in its real estate portfolio and has
partners in some of the investments. The New York-
based PE firm’s office portfolio in India closely rivals
the size of the country’s largest developer DLF Ltd’s
rental assets that include both office and shopping
malls. Until some time ago, DLF was the single-largest
office portfolio owner in India.
Property analysts and fund managers stress that
Blackstone has not only built such a large portfolio in
as short a duration as three years, but that it has
bought the best of what was available in the office
segment at a price that it was willing to pay. “We are
here for the long term. We are also disciplined, patient
investors. We are focused on ensuring the best in
class, institutionally led portfolio,” a Blackstone
spokesperson said.
Blackstone opened its real estate division in India in
2007, but started buying office assets only in 2011,
when not many investors were interested in the prime
rental asset class. It has invested close to $900 million
so far. The effort has been helmed by Tuhin Parikh,
senior managing director, real estate.
Even in the current scenario in which many PE and
sovereign funds take several months to close a
transaction, owing to strict due diligence and quality
Township
XRBIA unveils phase 2 of Eiffel City
in Pune
After having sold out phase I of its residential project,
Eiffel City, Pune-based XRBIA Developers has now
launched phase II at the fast growing Chakan area to
meet the rising demand. Spread over a 20-acre green
campus, phase II will consist of six towers comprising
1BHK, 2BHK and 3BHK apartments. With a price tag
of Rs 3,000 per sq ft, these homes cost approximately
Rs 14 lakh onwards. While 1BHK apartments range
from 396 sq ft to 461 sq ft, 2BHK units range from 650
sq ft to 814 sq ft. The three BHK apartments varies
between 877 sq ft and 1,200 sq ft.
“We are happy to present our new offerings to potential
business investors and local residents,” Rahul Nahar,
managing director at XRBIA developers, said in a
statement. Eiffel City has a revolutionary convertible
apartment design with courtyards by well-known
architect Hafeez contractor, the company said.
Nahar said the upcoming project is in close proximity
to schools and hospitals such as Dhirubhai Ambani
School, Poddar International School, Cambridge
International School and Aditya Birla hospital.The
developers hope that the upcoming festival of Diwali
will push more sales. “Chakan is not only emerging as
a destination for residential projects, it is also
developing into a realty investment area. With rapid
expansion in infrastructure, growth figures will gain
momentum with each passing year,” Nahar said.
“The success of phase I, which was spread over a 15-
acre complex comprising 700 apartments, encouraged
us to launch the second phase on popular demand,”
Vishal Nahar, director at XRBIA Developers told
Financial Chronicle. According to Nahar, the second
project, with an estimated cost of Rs 100 crore, will be
ready for delivery over the next 24 months. “We are
targeting sales revenue of about Rs 150 crore,” Nahar
said. Chakan, an important automobile hub, is listed as
one of the top investment destinations in India.
Financial Chronicle,09 October ‘2014,Pune
operation. According to the Export Promotion Council
for EoUs and SEZs, this gap is mainly due to
introduction of MAT and DDT. The increase in cost of
production for units due to imposition of MAT differs
based on the profit margin of the sector and would
roughly range between 0.5 per cent and 4 per cent.
The Hindu Business Line,09 October ‘2014,New Delhi
SEZ
PMO to take a call today on
restoring tax benefits for SEZs
The Prime Minister’s Office (PMO) is likely to take a
call on restoring tax benefits to Special Economic
Zones (SEZs) in a meeting with the Commerce
Ministry on Thursday. Principal Secretary to the Prime
Minister Nripendra Mishra will meet Commerce
Secretary Rajeev Kher to discuss the taxation issue in
detail and the various options available to deal with the
matter, a Commerce Ministry official told BusinessLine.
“The meeting will be a decisive one. Whatever the
PMO decides is likely be the final word on the matter,”
the official said. The PMO will also meet officials from
the Department of Industrial Policy & Promotion (DIPP)
to discuss progress in the industrial corridors and
smart cities. The Commerce Ministry has been trying
to convince the Finance Ministry to withdraw the
Minimum Alternate Tax (MAT) of 18.5 per cent and
Dividend Distribution Tax (DDT) of 15 per cent abruptly
imposed on the zones in 2012 which had brought to an
end the 100 per cent tax holiday promised to units and
developers for a 10-15 year period.
It has argued that the taxes were driving away
investments from the zones at a time when the BJP
Government stressing on boosting manufacturing. The
Finance Ministry, however, is worried about the
revenue losses involved estimated at about Rs.13,000
crore a year.
While the Commerce Ministry wants a complete roll-
back of MAT and DDT, it could also be ready for a
compromise solution if the PMO suggests it. One such
solution could be restoring tax benefits to
manufacturing SEZs, not including gems & jewellery
and petroleum products, as these account for only
Rs.50,000 crore of exports every year.
Since profit margins in such sectors are lower than IT
SEZs, these would account for revenue losses not
more than Rs.400 crore a year, the official explained.
Another solution could be to roll-back the taxes
partially. Out of 566 SEZs approved by the
Government so far, only 185 SEZs have come into
Hospitality
Blackstone, Embassy buy Four
Seasons Bangalore
Private equity giant Blackstone has agreed to acquire
a 50% stake in India's second Four Seasons Hotel
project in Bangalore, which was put on sale by majority
owner Goldman Sachs. Blackstone, which owns the
over $10-billion global hospitality firm Hilton
Worldwide, stepped in at the last minute to partner
developer Embassy Group to clinch an acrimonious
deal that was in the making for nearly two years.
Blackstone and Embassy will jointly acquire the
shares of Goldman Sachs and those of minority
shareholder and Southern land tycoon Dayanand Pai,
in the project valued at Rs 605 crore. The debt
component of the project is around Rs 275 crore, owed
to a consortium led by State Bank of India. Located in
Bangalore's northern suburb, the hospitality project is
part of a 1-million-sq-ft lifestyle development CityView
that comprises a 230-room Four Seasons hotel, 110
branded residences, and 200,000 sq ft of office and
retail space.
Some of Infosys co-founders and actress Deepika
Padukone have invested in the Four Seasons-branded
residences that carried a price tag of over $1 million. In
2012, Blackstone partnered Embassy Group in an
equal joint venture firm Embassy Office Parks, which
controls about 15 million sq ft of rent-yielding office
space across the two IT hubs of Bangalore and Pune.
TOI wasn't able to ascertain if the Four Seasons Hotel
project would come under this JV, which is expected to
be taken for a REIT (real estate investment trust)
listing in the near future.
Blackstone has till date been lapping up iconic
commercial office spaces in the country, spending
close to $1 billion, with little interest in other real estate
asset classes. While Blackstone exited from a luxury
residential project in Bangalore with an IRR of over
40%, the private equity fund has invested in a
hospitality project in Kolkata that is being developed by
the Salarpuira Group.
The Times of India,07 October ‘2014,Bangalore
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Disclaimer
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newspapers and magazines. ASK Property Investment Advisors has reproduced the articles and reports
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responsible for decisions that may be taken on the basis of the information.
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