REAL ESTATE ASSET PERFORMANCE FUND – 1 (REAP - 1)
Managed by Nisus Finance & Investment Managers LLP, promoted by NiFCO
This fund is now closed after huge success. Check our new fund REAP – 2
The Real Estate Asset Performance Fund (REAP-I) is a Rs.400 crores real estate fund, managed by Nisus Finance & Investment Managers LLP, promoted by Nisus Financial Services Co Private Limited (NiFCO).
The Fund is a high yield senior secured debt specialty finance fund focused on generating superior, consistent, risk-adjusted returns from residential projects which are safe and mostly at an advanced stage.
The Fund employs an innovative product strategy with an exceptional structure to manage risk providing the highest safety margins for capital protection along with a potential for higher incremental upside.
NiFCO management team has over 100+ years of relevant experience across real estate transactions worth over INR 200 bn either as principles, fund managers or providers of corporate real estate services. The distinguishing factor is an elite board of Independent Advisors bringing in the highest level of governance.
OPPORTUNITY
Real Estate is one of the leading sectors in terms of capital demand and ability to generate high returns along with high sectoral growth rates with real assets as underlying security. While the banking sector has about close to US$ 21 billion^ of exposure to commercial real estate loans, the number is estimated at least 4 times larger if home mortgages and other real estate loans are factored. Given that the flow of capital in Indian real estate was US$ 1 trillion* between FY’08 to FY’14 and is expected grow at a steady pace each year (from private and public sources across equity and debt), the ability and opportunity to participate even in a smaller percentage of this pie through professional management is compelling and in extra ordinary demand.
RATIONALE
Rapid Urbanization leading to rise in demand from 19 mn units to a projected 37 mn units by 2022
PM’s national & regional push for mid-income hou- sing, smart cities etc. under “Housing for all by 2022” FM’s budgetary allocation of INR 70,000 crores needs private capital support to build & sell inventory
Midsize projects needing short/mid term capital: a unique high value opportunity for funds
Inventory sales lagging offtake : an opportunity to secure high yields through hugely discounted and late stage projects in all major micro markets Absorption trends showing gradual pick up with receding interest costs & government sops/schemes Lack of large Private Equity (PE) firms to support project / enterprise level growth
Need for exits to current PE and financial partners, who are looking to show returns in their funds Timing mismatch in cash flows to service debt and expense obligations at the back of slowed off take Large statutory burdens erupting from back taxes including service tax, value added tax, etc. as well as premium on FSI, TDR and other government levies
STRATEGY
REAP – I Fund seeks to establish a significant real estate portfolio of mid-market residential projects. The fund will provide Investors with the opportunity to access investment returns from attractive and fundamentally strong Indian real estate development and infrastructure projects across India’s top-7 commercial cities. The fund will generate fixed periodic returns by investing primarily in brown field fully approved projects with all approvals in place and construction activity commenced completely thereby avoiding any regulatory / statutory risks. The target will be investments of tenure of an average of 24-36 months with in-built exit strategies. Fund will seek to meet the developer demand for last mile / gap financing or recapitalization in active projects where approximately 20%- 50% of the stock is already sold.
