Captains Speak     

Published: June 15, 2024
Updated: June 15, 2024

Max Estates

New projects have huge rental potential

New York Life Insurance Company has invested Rs 388 crore to acquire a 49 per cent stake in two operational office complexes of the Max Estates group.

This land parcel is contiguous to an existing 11.8 acres of land on Dwarka Expressway in sector 36A, Gurgaon, on which Max Estates had done a JDA last year. Both opportunities imply a combined GDV potential of over Rs 13,000 crore in the Gurgaon market by developing and selling an area of approximately 6.5 million sq ft. The company saw a strategic equity investment of Rs 388 crore from New York Life. Upon the closure of the transaction, New York Life will own a 49% stake in both its SPVs of Max Estates that hold the Max Towers and Max House assets respectively.

NOIDA PROJECT

According to Mr Vachani, in addition, FY24 saw several other milestones, including the successful launch of Estate 128, its first residential community in Delhi NCR, which was 100% sold on launch at a price realisation of Rs 18,000 a square foot, unprecedented in the Noida micro market, translating into a booking value of approximately Rs 1,800 crore. 100% of the first tranche, that is approximately Rs 440 crore, is already collected, and there are zero customer cancellations

The company also witnessed strong leasing traction across its portfolio while Max Towers and Max House both continue to be 100% leased. Max House Phase 2 is now 89% leased in 6 months of getting the occupancy certificate, and Max Square is 55% leased with a strong pipeline. All its assets command a 25%-30% rental premium to the micro market.

Coming to two of the under-development projects, Max Square Phase 2 in Noida has a total development potential of 1.1 million sq ft, which when combined with the completed Max Square project adjacent to it will entail a mixed-use office space development of 1.8 million sq ft. For Max Square 2, with receipt of all approvals, the company is ready to start construction in Q1FY25. The leased rental income from Max Square 2 is expected to be in the range of Rs 1,000-1,150 million at 100% occupancy.

coming to Max 65, Golf Course Extension in Gurugram, which is 7.15 acres of land parcel with a development potential of 1.6 million sq ft located right on Golf Course Extension Road and is a 10-minute driving distance from Sector 56 Metro Station on Golf Course Road, with the receipt of all approvals, it is ready to start construction in Q1FY2025. The leased rental income from this project is expected to be in the range of Rs 1,600-2,000 million at 100% occupancy.

HUGE SUCCESS

Its first luxury residential project, Estate 128 in Noida, has been fully sold out and garnered a pre-formal launch sale of Rs 1,800-plus crore. Over the last 9 months, the company has collected Rs 441 crore for the project. The payment schedule for this project is construction-linked, translating into 25% collection every year.

On the revenue front, the consolidated revenue of the company stood at Rs 93 crore. On the profitability side, it had a loss of Rs 68 crore as a profit before tax loss. The company has incurred advertising and marketing expenses of Rs 23 crore in FY24 for the Estate 128 project, which has been accounted for as an expense in the current period, while the revenue will be recognized subsequently at the time of position in line with accounting principles.

Furthermore, on a conservative basis, it has also taken a 100% provision on the investment made in Azure Hospitality, amounting to Rs 45 crore. Normalized EBITDA and profit before tax in FY24, excluding the aforesaid two transactions, would have been Rs 40 crore and the company would have been broken even on a pre-tax basis.

The lease rental income for the assets which are put under use has shown a growth of 37% yoy to Rs 66 crore in FY24. Regarding the liquidity position, its external debt from banks stood at Rs 735 crore as of March 31, 2024, against which it had cash and cash equivalent of Rs 374 crore. Hence, the net external debt stood at Rs 361 crore. With a reported net worth of Rs 1,431 crore, its debt equities stood at 0.38x.