The collapse of Lehman Brothers, the world’s fourth-largest investment bank, has left some Indian real estate developers gasping.
MUMBAI: The collapse of Lehman Brothers, the world’s fourth-largest investment bank, has left some Indian real estate developers gasping.
Unitech Ltd, India’s second-largest developer by market capitalisation, had received Rs 740 crore from Lehman Brothers Real Estate Partners (REP) for its mixed use development project at Santacruz in Mumbai just two months ago on July 17.
That day, Unitech said Lehman will invest about $175 million (Rs 740 crore) and will acquire a 50% stake in the initial phase of a project on the Western Express Highway in Mumbai.
This initial phase entails development of 1 million sq ft of office space out of a total developable area of 18 million sq ft.
“Lehman and the Western Express JV will each contribute 50% of the construction costs,” Unitech said.
The Western Express JV meant Unitech and its local partner Rohan Developers.
A Unitech spokesperson said the company “has already received the $175 million in July, so there is no problem”.
The construction cost for the first phase of the project is pegged at Rs 300 crore.
As per their stake equation, Lehman has to invest Rs 150 crore but hasn’t to date, according to sources familiar with the development.
Also Unitech was expecting further investments from Lehman Bros for the same project and its Worli project also.
Unitech was expecting an additional Rs 500 crore from Lehman including for the Worli project.
The Ashok Piramal-backed Mumbai-based realty major, Peninsula Land Ltd, had signed a memorandum of understanding (MoU) with Lehman whereby the US-based company was to invest $125 million or Rs 576 crore in its projects for minority stakes.
The first tranche had to come for the Hyderabad project where Peninsula is developing an integrated township and IT Park on a 31-acre plot bought from Rallis India.
To a query by DNA Money on the investment status, Peninsula said: “The investment for Hyderabad would come once we start the construction … which would begin in the third quarter this year.”
The company said it would not be affected because most of the money was raised from non-Lehman sources.
Peninsula Land has earmarked Rs 2,500-3,000 crore for land acquisition in the next three to five years.
The investment was to come from Lehman and some of Peninsula’s domestic and offshore funds.
But DLF, India’s largest developer, may be thanking its stars.
That’s because Lehman has already paid $200 million or Rs 921 crore to DLF Assets Ltd, a subsidiary.
“We have already received the payments so we are not facing any trouble,” a DLF spokesperson told DNA Money.
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