An investment arm of Mitsubishi Corporation of Japan has signed definitive agreements with South India-based Shriram Properties for partnership in an ongoing large residential development project in Chennai which will see an investment of close to Rs 180 crore from the former. This marks Mitsubishi’s entry into the Indian real estate sector.
Shriram was the chosen partner for the first-ever realty investment by TPG, Tata Capital, Walton Street Capital and Starwood Capital, respectively, in the past as well.
Under the terms of the agreement, Mitsubishi arm is investing Rs 180 crore towards 70% stake in an ongoing residential project named Shriram Park 63. The project is being developed on a prime land at GST Road in Chennai, with over 1,450 residential units and 2 million square feet of saleable area. Shriram has already pre-sales of over 25% of the project that has revenue potential of over `1,000 crore in the next three to four years.
M Murali, MD of Shriram Properties said: “ Mitsubishi is another significant addition to the list of marquee partners of Shriram Properties’ projects. With positively changing industry landscape and improving market outlook, timing is appropriate for accelerating the development and leveraging best of both companies towards creating sustainable value for stakeholders”.
Shriram has active ongoing development at this location, with the company having already delivered over 2 million square feet of office space to Xander adjacent to Shriram Park 63 and developing an additional 2 million square feet of office space under the development management (DM) model.
Kentaro Koga, general manager, India/Myanmar, real estate business, Mitsubishi and CEO of its investment arm, DRI India, said: “We truly feel that Shriram is our best partner for first project in India. Given its strong brand, execution and delivery track record, and focus on customer value, we believe this partnership will support our growth aspirations. We are looking forward to working with such credible partner in an important sector in India.”
Shriram has pursued the partnership model for accelerated development in several of its past and current projects. It has a successful project partnership involving several marquee investors including Sun Apollo, Hypobank, Xander, Amplus Reality, ICICI Prudential, Motilal Oswal and ASK Property Investment, many of whom had profitable exits as well. The Mitsubishi partnership is an extension of this strategy aimed at leveraging strengths of both partners for superior value.
Shriram Properties has a focus on affordable, mid-market housing segments in its core markets of Bengaluru, Chennai, Coimbatore, Vizag and Kolkata. It has delivered over 11 million square feet across 26 projects in last few years and based on FY 2017-18 pre-sales performance, it is is among top 3 players in Bengaluru and Chennai.
The real estate company has attracted over $ 800 million of investment so far from foreign and domestic investors, both as project partnership and equity investment in the company. Marquee private equity investors like TPG, Tata Capital, Walton Street Capital and Starwood, together hold 60% of equity capital in the company.