APG-led club forms $275m JV with Godrej – Exclusive

The second residential development program between the two in India will be managed by a new fund management subsidiary set up by the Mumbai-based property developer.  

Godrej Properties Limited, the Mumbai-based developer, has launched a $275 million residential property development program in India with Dutch pension asset manager APG Asset Management as the lead investor.

Godrej Residential Investment Program (GRIP) II is the sequel to the first residential-focused programmatic joint venture partnership between the developer and an APG-led group of investors that was set up in 2012. PERE understands that APG has close to 50 percent interest in GRIP II.

The news of the joint venture comes amidst a wider expansion of Godrej Properties’ fund management operations.

In what is one of the first such moves by an Indian property developer, the group has now carved out a separate real estate funds management subsidiary called Godrej Fund Management (GFM) that will have operations in both Singapore and India. Karan Bolaria, who was heading fund management and capital strategy functions within Godrej Properties, will now be taking charge of the newly-created entity. GFM will be responsible for managing GRIP I and II, as well as any other future investment vehicles that are raised.

Godrej Properties has been able to coral more capital for GRIP II as compared to its predecessor that closed on $200 million. PERE has learnt that all the existing investors in GRIP I also put capital into the follow on vehicle. Godrej Properties also holds a 20 percent interest in GRIP II.

“We are pleased to expand our relationship with Godrej Properties,” said Sachin Doshi, managing director and head of private real estate investments for Asia Pacific at APG. “Our strategy of partnering with only the best local operators has allowed us to succeed in a complex market like residential development in India. In spite of a general slowdown in the asset class in the country over the last three years, our partnership projects sold well, which is a testament to our partner’s execution capability and brand strength.”

Similar to the investment strategy of GRIP I, the capital raised for GRIP II would be invested in the development of mid-income housing projects in Mumbai, Delhi and the national capital region, Bangalore, Pune, Hyderabad and Chennai. The vehicle’s corpus is expected to be deployed in a total of six projects with an average ticket size of between $30 million and $50 million. An eight-year window has been set to generate returns from the investments.

GRIP I is now believed to be fully invested in four residential development projects in Mumbai, New Delhi, Gurgaon and Bangalore.

Pirojsha Godrej, managing director and chief executive officer, Godrej Properties said that the new platform in partnership with APG would help the firm attract high quality long-term equity investors to partner with in its developments across India.

“This fits well with our strategy of deepening our presence across the country’s leading real estate markets while maintaining a capital light development strategy,” he said.

Godrej Properties is currently developing approximately 115 million square feet of properties across residential, commercial and township projects in 12 Indian cities.