Red Fort looking at $161m in developments

The India-focused private equity real estate firm has closed a $65 million investment in New Delhi, and is eyeing an additional $96 million across several projects.

New Delhi-based private equity real estate firm Red Fort Capital is eyeing several development investments around the Indian capital, which could total around $161 million over the next few months, according to the firm.

Red Fort has closed a $65 million investment in a 2.2 million square foot residential development in a suburb of New Delhi, according to Subhash Bedi, managing director at Red Fort. The project is a joint venture with local developer that Red Fort has worked with before, Lotus Greens Development.

With other projects in the pipeline, the total investment in Lotus Greens’ New Delhi projects could reach about $161 million, but those projects are still not finalized, Bedi explained. Due diligence in such projects in India usually takes between six to nine months, he added.

“This is a developing partner that we’ve worked with for many years, so we are comfortable investing in new projects alongside them,” Bedi told PERE.

This investment involved no leverage, but is still expected to generate a 25 percent IRR over a five-year holding period, Bedi said. The project will launch in two weeks, and development is expected to take four years. However, Red Fort and Lotus Greens are already being approached by buyers for the condos it has yet to build.

The $65 million investment came from Red Fort’s $500 million Fund II, but Bedi added that it is yet to be decided where the remainder of the $161 million will come from. Although he declined to comment on how far invested Fund II is at this point, it is understood that the firm is currently raising its third opportunistic fund, expecting a total of between $500 million and $700 million.

Although India is not a popular real estate market to be bullish on at the moment, Bedi said that he remains confident of the market’s fundamentals. With around 4 million middle-class households being formed every year, there will always be homebuyers over a five-year investment horizon.  Over the past six years, Red Fort has sold 10,000 homes in India, he added.