It plans to raise a total amount of around Rs 330 crore by March 31, 2021 through the PDOF route; the total value of the properties held this year is expected to be around Rs 750 crore
The coronavirus pandemic may have created stress in the overall real estate market but investors continue to scout for Grade A commercial real estate properties at higher yields and distressed prices.
To cash on the opportunity, PropShare Capital, a tech-enabled commercial real estate investment platform, has raised Rs 100 crore in its second COVID-19 Distressed Opportunities Portfolio Management Scheme offering.
The company plans to raise Rs 150 to Rs 200 crore by March 2021 though PDOF and around Rs 700 crore to Rs 750 crore through sale of new properties by March 31, 2021.
“The total amount we plan to raise PDOF is Rs 330 crore to Rs 380 crore by March 31, 2021 and the total value of the properties this year is expected to be around Rs 700 crore to Rs 750 crore,” Kunal Moktan, co-founder and CEO, PropShare Capital, told Moneycontrol.
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In June, the firm had closed a Grade A distressed listing offering for Rs 80 crore with participation from more than 150 investors across HNIs, family offices, retail and institutional investors including a Japanese family office, within a span of two weeks through its platform.
A part of this offering has already been allocated to a Grade A property in Hyderabad with an estimated IRR of 19 percent. The company deployed more than half of the amount raised in June into its first distress listing on the platform which was a 100,000 sq ft property in Hyderabad leased out to a blue chip tenant.
It had looked at the asset that was owned by a manufacturing company based out of Mumbai almost three years ago.
The first close of PDOF II is expected on September 18 at Rs. 50 crore with a total estimated capital raise of Rs 100 crore. PDOF II has already seen demand for close to Rs. 600 crores on the platform, he said.
“During the pandemic they wanted to liquidate this property and came back to the table. We stuck the deal at 20 percent lesser amount than what we would have paid three years ago. We utilized half the proceeds of PDOF 1 for two properties – Rs 50 crore went into the Hyderabad property and the remaining is likely to go into the Bengaluru property,” he told Moneycontrol.
The company’s next listing comprising Rs 30 crore from PDOF 1 and half from the amount raised on September 18 (around Rs 25 crore) will go to the next distress listing on the platform which is likely to be in Bengaluru,” he said.
The company currently has a pipeline of Rs 300 crore with two properties in Delhi and Gurgaon, two are in Hyderabad, four in Bengaluru and one in Mumbai, he said.
Although the pandemic has led to stress in the larger real estate market, it has created a unique window of opportunity for investors to access Grade A commercial real estate properties at higher yields and lower prices.
Through PDOF, deploying investor capital quickly and efficiently in high yielding Grade A assets has become easier. When compared to a direct investment, PDOF investors get a 25 percent lower management and performance fees, the yield is almost 1.5 percent higher, access is guaranteed to distressed opportunities and there is diversification of investments exceeding Rs 50 lakh.
Established in 2015, PropShare Capital is India's first and largest tech enabled commercial real estate investment platform that gives ordinary investors access to rent-yielding commercial real estate at much lower investment thresholds of Rs. 50 lakh.PropShare Capital's proprietary secondary sale engine provides investors liquidity and a separate asset management team actively manages the properties in order to optimise investor returns.