Citigroup Property defers investments in Nitesh Estates

Citigroup Property Investors, part of Citigroup, has deferred almost 85 per cent of its $360-million investment into a key real estate developer in India, signifying its waning interest in realty projects because of the global economic crisis.

Citigroup will, however, go ahead with its financial commitment for the developer’s $125-million Ritz Carlton hotel project. The Ritz-Carlton is part of the world’s largest chain of hotels and resorts, Four Seasons, and Bangalore will be the first city in India to have the property.

“Citi had signed for $360 million, out of which the Ritz Carlton is $55 million… Citigroup Property Investors, our joint venture partner for the Ritz Carlton project, is going ahead with its commitment of over $55 million equity in this project. Citi has deferred the rest of the money due to the global crisis,” Mr Shetty said.

The real estate developer has on its board of directors, former SEBI chairman, Mr G.N. Bajpai, and former ONGC chairman, Mr Subir Raha, among others.
financial partner

The company is also on the lookout for a financial partner for its other prestigious project, a mixed-use development in Chennai, as “Citi’s $100 million is not on for this project due to the economic crisis in the US,” he added.

Mr Shetty said a financial closure on debt has also been completed with a consortium of four banks — State Bank of India, Punjab National Bank, Central Bank and Canara Bank — for a total of Rs 300 crore.

The Ritz Carlton project is on in full swing, he said. Construction of the property is progressing well “after initial hiccups with rock on site”, he added. In fact, according to Mr Shetty, the company has drawn down a sizable portion of the Citigroup’s $55 million funding in the last one month.

The mock-up rooms are ready, and “we will be opening the hotel in December 2010,” he said. When opened, the hotel will have 281 rooms, three restaurants and a spa, and high-end retail, he added.

In all, the company has about 20 joint venture projects, at a total value of Rs 2,500 crore.

Mr Shetty said that his company was also developing a large-sized corporate housing project for ITC Ltd, which will be delivered in April this year.

Besides, its high-end residential project — Nitesh Buckingham Gate, where condominiums are priced at over Rs 8 crore — on upscale Lavelle Road in Bangalore will be will be ready in 45 days.

For the 7.5-lakh-sq-ft retail project — Nitesh Mall — coming up at Indira Nagar, Bangalore, the company will have HDFC Property Fund as its partner at an SPV level, where the development would also include a 150-room serviced apartment to be operated by Marriott. The company is also building high-end villas in Goa, said Mr Shetty.