New project a 60:40 JV with Godrej Ind: Godrej Properties

4172 Investors following Godrej Property. Share this News with them.

0

Like this story, share it with millions of investors on M3

New project a 60:40 JV with Godrej Ind: Godrej Properties

Pirojsha Godrej, ED, Godrej Properties, told CNBC-TV18 about the first project coming out of Vikhroli called ‘The Trees.’ “It is a 60:40 profit sharing JV agreement between Godrej Properties, which will get 60% of the profits and Godrej Industries, which will get 40% of the profits.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Markets Midday on CNBC-TV18 Watch the full show » ALSO READ See latest News about Godrej Property See previous management interviews See what other Experts & Brokerages are saying about Godrej Property

Pirojsha Godrej, ED, Godrej Properties , in an interview on CNBC-TV18, spoke in detail about the first project coming out of Vikhroli called 'The Trees.' "It is a 60:40 profit sharing JV agreement between Godrej Properties, which will get 60% of the profits and Godrej Industries , which will get 40% of the profits. Godrej & Boyce is the land owner and has a long-term lease agreement with Godrej Industries," he says.

The combined joint venture will see both companies paying Godrej & Boyce a fixed annual lease. However, majority of the profits will be enjoyed by Godrej Properties and Godrej Industries, he adds.

Below is a verbatim transcript of his interview with CNBC-TV18's Latha Venkatesh and Anuj Singhal. For complete details watch the accompanying video.

Q: What is the first plan that you have for your Vikhroli property, 'The Trees' that is getting launched?

A: We are very excited today. Yesterday, we kicked off our first development in Vikhroli. It is called 'The Trees'. This development is going to be a 35 acre mixed used development. It will start with a commercial office building that will house the headquarters of several Godrej Group companies as well as act as a commercial space that we will lease out to other tenants.

This will be followed by residential space of about 5 lakh square feet, further commercial space of about a million square feet and some retail and five-star hospitability space. We have associated with world class architects and planners to get to this stage and we are very happy that we will be able to launch it on time as planned in January.

Q: It is quite interesting that you are going with commercial first and residential later. The trend has been that while the residential rates are back to their peak, commercial rates are still about 30-40% off. Didn't you think of launching residential first and then commercial?

A: There are good arguments to be made on both sides, But, for a couple of reasons we decided to go ahead with commercial first. The first reason is that we have our own offices currently located on the site. We need to develop a new building to house those offices.

Secondly, if you look at Commercial real estate it does tend to go cyclical because when things are good, too many people enter it. People get a little bit more concerned when development slows down. We think that when we complete this first commercial building which will be around the first few months of 2013, the commercial market by then will have picked up considerably and we will actually have timed the market very well.

Q: From the point of view of an investor who is not a resident of the city, could you tell us under who is the ownership of land and then who will take charge of the development, put in money and reap the benefit?

A: 'The Trees' is a 60:40 profit sharing JV agreement between Godrej Properties, which will get 60% of the profits and Godrej Industries, which will get 40% of the profits. Godrej & Boyce is the land owner and has a long-term lease agreement with Godrej Industries. The combined JV will pay Godrej & Boyce a fixed annual lease but the vast majority of the profits of the project will be enjoyed by Godrej Properties and Godrej Industries.

Q: What does Godrej Properties and Godrej Industries put in by way of money in FY11 and FY12?

A: Godrej Industries' contribution to the JV will be the land. It is a profit sharing agreement for any cost. Any profit will be calculated after the cost generated by the project. The profits will be shared 60:40. Godrej Properties will be responsible for arranging all finances and in all ways will control the decision making of the development.

Q: What has been the response in your newly launched project in Gurgaon and if you can update us on some amount of sales in the Kolkata commercial land?

A: Both those projects are doing very well. In Gurgaon we have sold out pretty much everything that we have launched so far. We have sold about 6 lakh square feet in that project and have very little remaining. And we are hoping to add some new projects in Gurgaon. That is one of the areas we are very excited with because for us it was a new region. Of course, there are a lot of established real estate players in that area and we have seen tremendous success in the project.

In Kolkata, while we have had two commercial projects, in our first residential project, we have also sold about 6-7 lakh and is going very well. In Ahmedabad, we have sold a further 9 lakh square feet, in the month of January itself. In January, we have sold well over a million square feet which is very good volume.

Q: What do you think you will sell by way of a million square feet in Q4?

A: We don't make any forward looking statements. We do have many projects that are open for sale currently where we have seen healthy momentum in places like Ahmedabad, Gurgaon, Kolkata and Chennai. We will see very healthy growth. As we have planned, Q4 should be a strong quarter for the company.