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PE Funds & NBFC have stepped up active monitoring of their investments in real estate

Posted by BrickAcres on March 30, 2016
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Several private equity funds and non banking finance companies
have stepped up active monitoring of their investments in real
estate amid concerns over delays in completion of projects and
the consequent returns.

Indiabulls Asset Management, Milestone Capital Advisors and
NBFCs such as Xander Finance have either set up in-house teams
to monitor investments or are bringing in third-party firms to
monitor costs of projects, request for quotation (RFQs) for
vendors,Management Information System (MIS) reports ,sales and
escrow accounts, among many other aspects.

Ambar Maheshwari CEO for private equity funds at Indiabulls
Asset Management Company, which has a four-people asset
management team that works alongside the asset management
business of the Indiabulls group said,”Investors today are far
more involved in monitoring projects so that they can help take
corrective measures much before something goes wrong in a project ”.

Milestone Capital too has in-house property management expertise
which it utilises in active management of its investments.

Rubi Arya, executive vice president of Milestone Capital Advisors
said mutual fund managers keep reshuffling portfolios to gain from
market movements, which is not a practice in private equity, and
hence there is a critical aspect of investment monitoring.

“By moving from pure investing models to investment management
models, a fund manager can not only monitor the investment well but
also offer various value additions to create a possibility of a
better valuation for exit,” she said.

Arya said that this helps create additional incentives for the
developer partners to provide timely exits even in cases where
projects may be struggling to meet their deadlines.

“In a few extreme cases, we have not shied away from taking control
of the project and bringing the development back on track to provide
it the expected exits,” she said.

According to data from property research firm Liases Foras, a third
of more than 25 lakh apartments launched between 2008 and 2014 were
delayed by at least a year .Today, some of those limited partners
are employing third party monitors to safeguard theiinvestments that
might be stuck.

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