NDR InvIT Trust looks to invest Rs 2,000 crore on 9 million sq ft of space through debt

NDR InvIT Trust, sponsored by NDR Warehousing, plans to add 9 million sq ft of space in the next two-and-a-half years with an investment of Rs 2,000 crore. The investment will be predominantly through debt, said managing director Amrutesh Reddy. In June, Investcorp-backed NDR Warehousing filed draft infrastructure investment trust (InvIT) papers to raise around 1,100 crore, becoming the first warehousing company with plans to do so.

This will be a privately listed InvIT. NDR’s plans come at a time when global investors and warehousing developers such as Blackstone, Morgan Stanley, CPPIB and Prologis, among others, are pumping in millions of dollars into the Indian warehousing sector which has a total stock of 350 million sq ft. Morgan Stanley Real Estate Investing recently invested Rs 300 crore in a logistics developer who is working on a

warehousing project near Mumbai. CPP Investments-backed IndoSpace Core acquired an 8,00,000 sq ft of Grade A warehousing Asset at Hyderabad International Airport City from GMR group.

Though market sources report NDR could come out with a public InvIT to fund its expansion in next two years.  After InvIT gets listed, it’s debt will come down to zero, he said. Krishnan S Iyer, chief executive, NDR InvIT, said  joint ventures constitute 25 % of their portfolio and acquired projects are under 10%, while the rest are its projects. “Going forward, share of JVs and acquired projects would go up,”.

The 2 million sq ft projects are planned in Hosur, Aurangabad, Kolkata and Hyderabad and land has been tied up, he said. Though consultants and investors say land acquisition is challenging due to litigations and local issues, Krishnan said they have been solving these problems with their own expertise and with JV partners. Land costs constitute about 25% of warehousing project costs.In July, Investcorp, a global investor, put in 500 crore into NDR Warehousing. This came after Investcorp led a $55 million investment round in NDR Warehousing last year. Though yields in warehousing properties were subdued in the recent past, Reddy said they will go up on higher rents in the sector. “So far costs were high and rents low hence yields were lower. With rents going up, yields will go up." Construction costs have gone up 60% in last three years and now they are cooling off, he said.