Keystone in talks to redevelop projects in Mumbai

Keystone Realtors, a Rustomjee Group company, is in talks to acquire at least 20 residential property projects involving redevelopment work in Mumbai and expects around half of these to be added to its existing development portfolio soon.

In addition to these redevelopment projects, the company is also in advanced discussions to enter into an agreement to jointly develop three projects in prime areas of the country’s commercial capital.

Currently, the company’s development portfolio includes around 11% work related to redevelopment projects and it is looking to increase this proportion.


“I think the focus will be on redevelopment, because we've kind of bolstered that part of the portfolio,” Boman Rustom Irani, CMD, Keystone Realtors, told ET. “We will continue to acquire more projects even in joint venture and joint development space…We will try and limit the number of properties into which we would need to put our capital.”

Real estate projects involving redevelopment and rehabilitation are the mainstay of Mumbai’s property market as the land-starved city has few vacant land parcels. At present, around 19,000 properties in the city are awaiting redevelopment and this would be a big business opportunity for developers with established brand and execution track record.

Keystone Realtors, which operates under the Rustomjee brand, listed on stock exchanges last week following the company’s initial public offer. The developer has raised more than Rs 635 crore through its maiden share sale. It plans to use a part of the proceeds for repayment and prepayment of certain borrowings availed by the company and funding acquisition of future real estate projects.

“We are bringing down our secured debt to Rs 560 crore from Rs 901 crore. Our equity has also gone up to Rs 1,600 crore, so we have plans to keep our debt-equity at around 1:1. This gives us tremendous headroom for growth,” Irani said.

The company has around Rs 300 crore of free cash available and has the option of picking up projects where debt is required for construction funding etc.

“Our pipeline of 34 million square feet is not something that is absolutely long or way out. So, we have got various projects that we will be announcing in the coming year…With regards to our ability to continually replenish our stock redevelopments wherever whichever areas that we are working in, whatever we deliver, we try and replenish it by 1.5 times so that gives us the growth out there in that area,” Irani added.

For its joint venture and joint development projects, the capital-light model followed by the company, it will focus on areas where infrastructure development is visible in terms of government-supported projects and business activity.

For instance, a micro-market like Bhiwandi that is emerging as a logistics and warehousing hub and therefore the company has started work in the nearby location of Dombivali.

The company, as on March end, had 32 completed projects, 12 ongoing projects and 19 forthcoming projects across the Mumbai Metropolitan Region (MMR). These include affordable, mid and mass, aspirational, premium and super-premium segments.

Recently, the developer entered into an agreement to jointly develop a nearly 2 million sq ft affordable residential project on a 12-acre land parcel in Kalyan, near Mumbai, marking its foray into the eastern region on the outskirts of Mumbai.

So far, it has developed 20.05 million sq ft of high-value and affordable residential buildings, premium gated estates, townships, corporate parks, retail spaces, and various other real estate projects.