Below is the verbatim transcript of Nitesh Shetty's interview on Prime Property.
Q: I have to begin by asking you about the Ritz Carlton, what is the update, when is it opening?
A: The Ritz Carlton is ready as we speak right now. The operator is currently going through the entire testing and commissioning programmes. The operator is right now on the hiring spree. We are also doing the last bit of the external development works which are pending; but otherwise the hotel as we speak is pretty much ready. Being India's first Ritz Carlton we are not letting anything to chance. It is going to be a fabulous property. I believe that it should be opened in Q1 of coming financial year. That is the best update I can give you right now.
Q: You are not giving me any specific date but from what I gather it is going to be any day after April 1. You say things have been finalised, so has Ritz Carlton for example decided what the room rates will be?
A: Ritz Carlton anyway globally has a 25 percent premium to market in any of the cities they operate in. Whenever we open there will be definitely 25 percent premium to the local market. The exact figure of it is best known when it opens.
Q: While we are discussing luxury and hotels, I understand you along with Xander Fund are in the race to acquire Goldman Sachs's 73 percent stake in the upcoming Four Seasons hotel in Bangalore. How is that deal working out?
A: That is a question I am just going to let go right now. I don't want to speak on market speculation right now.
Q: You had many private equity guys as partners. What is the status, are they pressing you for an exit? Are you perhaps in the market to raise more funds?
A: We have about four different private equity investors in the company. Out of which we have given two or three of them full exits and some of them partial exits over the last few years. Some of the best names in the world have happened to associate themselves with the company. One of the top 10 hedge funds in the world, Apollo and the top 10 private equity investors in the world and companies like HDFC Realty want to associate with us. We are continuously seeking to raise capital for our future expansion. So, it is an ongoing process.
Q: So, you are looking to raise funds for expansion. How much do you want to raise and will this be only for specific projects or could it also be at an entity level?
A: Currently the residential projects are well capitalised through internal accruals and the sales are happening in these projects. Our annuity income and long term investment projects have equity which has been raised through private equity funds and through construction debt.
Going forward we would seek partners to acquire income yielding assets, larger joint development properties or any potential marquee asset similar to our involvement with private equity in the past.
Q: How leveraged is the company, what is your debt equity ratio like?
A: Our debt equity ratio is very healthy and reasonable. Our debt equity ratio currently as we speak is in the range of about 0.3:1. In real estate parlance that is reasonably under leveraged right now. Our model is of joint development right now and not acquiring land or land banks, which is very different than other developers, this has helped us to be in good stead.
Q: Let's shift focus to your launches. What are your plans for 2013?
A: In 2013 you can definitely expect at least about 6-7 residential launches in 2013 out of which at least three of them will happen over the next 90-120 days.
Q: What exactly are you launching immediately?
A: There are two launches coming up shortly. The first one will be called Nitesh Palo Alto which is going to be in the Sarjapur Marathahalli Ring Road which is the IT corridor of Bangalore and this is going to be a villament project. We are expecting to launch the project at a price of about Rs 6500 a square feet, which would be a ticket size of about Rs 1.5 crore per villament. It is close to about 800 thousand square feet of development and the project cost is about Rs 400 crore.
The second one is Nitesh Park Avenue which is located bang in the heart of the city on Sankey Road in High Grounds, which is overlooking the Bangalore Golf Course. This is going to be an iconic tower which is designed by New York-based Kohn Pedersen Fox (KPF), which is probably one of the world's top two design firms. They are designing something for India probably for the first time. So, that is something to look forward to. The ticket size over there will exceed about Rs 14-15 crore per condo.
Q: What about the other launches, what would be the average ticket price?
A: Most of these projects the pricing will be in the range of Rs 5000-6000 a square feet except one luxury project, which will be in excess of Rs 25000 a square feet, which will make it one of Bangalore's most expensive residential projects. If you keep that aside, bulk of the projects would be in the Rs 5000-6000 range.
We touched an average price of about Rs 5200 a square feet last year. Our average ticket size is Rs 50 lakh, there is nothing less than that in our portfolio.
Q: How exactly do you define your residential portfolio? You have all these luxury projects, you have projects also for Rs 50 lakh, what kind of a developer are you?
A: We are in the excess of Rs 3500 crore in the residential portfolio itself. But we provide combination middle income housing as well as the very high end luxury. I like to believe that the bulk of our projects would be in the upper segment, over Rs 50 lakh segment.
Q: Will you foray out of your comfort zone, are you perhaps looking to foray into North India, lets say New Delhi or Gurgaon?
A: No, absolutely not. No plans in North India right now as we don't understand that market.
Q: Are you behind schedule? I understand you are late in one project in Whitefield for instance?
A: We are just delivering two projects as we speak, this particular month. Last year we delivered 0.5 million square feet for one residential project and remaining 4 million of residential projects which are closer to delivery right now will pretty much be delivered in the next 12-15 months. We had some delays, in probably one project due to some external contingencies. But otherwise by and large the projects have been reasonably on track, if you keep a certain contingency time of 3 or 4 months buffered in.
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