In a bid to broaden its presence in the hospitality sector, Bengaluru-based developer Brigade Enterprises Ltd is in talks with potential traders for a strategic investment, its chairman and managing director M R Jaishankar mentioned on Wednesday.
“We have a strategic investment by Singapore government company GIC in the Brigade Group and are now looking at a strategic investment in the hospitality sector to take care of our future growth. Talks have been on for some time but are not fully concluded,” mentioned Jaishankar. The firm’s new lodge, launched in Gujarat International Finance Tec-City (GIFT City), shall be managed by French hospitality participant Accor beneath the model ‘Grand Mercure’.
While Brigade plans to ramp up the variety of working keys throughout its hospitality portfolio from 1,350 to 2,000 in the following 24-30 months, it is usually trying to enhance future development because it seems to be so as to add keys past 2,000.
The 151-key Grand Mercure has been constructed at a mission value of Rs 150 crore, with the gamers anticipating an preliminary occupancy of 35-40 per cent, which is prone to go up in close to future. The Brigade Group has already signed offers with Accor for extra lodge properties in Bengaluru and Mysuru in the close to future. Overall, the corporate has had common occupancy charges of 70-75 per cent throughout its properties.
Plans are additionally afoot for residential, business, retail and hospitality initiatives of round 44 million sq. toes (msf), of which 19 msf is already beneath development, together with 10 msf in residential, eight msf in workplace area, and the remaining in retail and hospitality. Jaishankar mentioned that the group’s capex plans run into Rs 2,500-3,000 crore a 12 months.
With initiatives lined up in different segments, Brigade’s ratio of residential to non-residential has already moved from 75:25 to 55:45. “If all goes well, we will maintain this at about 50:50,” Jaishankar mentioned.
Exuding confidence, Jaishankar reiterated the group’s previously-announced development steerage for FY20. “The intent is to maintain 25-30 per cent growth in FY21. We have the projects at advanced stages, based on which, we are confident of 25-30 per cent growth,” he added.
Jaishankar acknowledged that the slowdown in actual property was cyclical. “We believe the government is working on it. Responses have to be faster. Real estate is a 10-year business cycle,” he mentioned.
With most of its development being funded by way of a mix of securitised lease leases, inner accruals and institutional funding, the group is bullish on its debt-equity ratio. “Our debt:equity is 1:1, and 75 per cent of the debt is securitised either by lease income or what we call gross operating income of the hospitality sector. Our residential exposure is only 20-22 per cent of our overall debt. We had a QIP in 2018, so we don’t see another happening immediately. We will try to maintain debt levels,” Jaishankar added.