Bangalore-based real estate firm, Total Environment has raised over Rs 1600 crore from top-tier financial institutions, driven by robust residential sales.
The fund was secured from leading banks like State Bank of India, Standard Chartered Bank, ICICI Bank, Axis Bank and RBL Bank at interest rates ranging from 9.7% to 12.5%. This is in addition to an investment of Rs 1000 crore funding that it received from HDFC Capital for new projects.
The money will help speed up the delivery of around 12 mn sqft of ongoing residential projects across Bangalore.
“Our strong focus on sales and the resurgence of the residential market has helped us exit expensive debt. We have reduced our cost of funding, and it will help us to move much faster with the construction of our projects now as we move towards delivering 100 custom-designed homes per month to our customers,” said Kamal Sagar, founder of Total Environment.
The company had paid up investment of Rs 2070 crore across multiple residential projects from domestic and foreign entities such as Brookfield Asset Management, HDFC Capital, HDFC Bank, and L&T Finance between 2007-2008, which were invested between 2015 and 2019 with the cost of capital ranging between 14% to 20% per annum.
In one such deal, Canada-based Brookfield Capital Partners, the private equity arm of Brookfield Asset Management, invested Rs 800 crore in Bengaluru-based realty developer Total Environment Building Systems’ portfolio of five projects spread over 4.5 million sq ft.
Additionally, HDFC Capital invested Rs 229 crore in a residential apartment project in Whitefield, Bengaluru. The investment supported the development of one million square feet of residential apartments in the Pursuit of the Radical Rhapsody project. The firm had given two exits to HDFC.
Total Environment is one of the largest developers of custom-designed homes and has delivered 5.5 million ft. of residential and commercial space. With its base in Bengaluru, the real estate firm currently has 14 million square feet under construction and has achieved sales bookings of Rs 3624 crore in the calendar year 2023.
Total Environment was founded in 1996 as a forward integration initiative by design firm Shibanee & Kamal Architects, with a strong sense of purpose to simply create homes that are authentic and designed for the people that would live in them. “Each custom designed home is built with care & craftsmanship, through our principles of People-Centred Design” said Kamal. The company also backward integrated into production of furniture, doors and windows, metalwork and several other parts of its supply chain and also manages its properties for life.
The growing residential sector, coupled with heightened working capital needs, led to a surge in debt transactions within housing projects. Property developers are leveraging these transactions to address the demand-supply disparity effectively.
The current trend has resulted in a substantial increase in private equity and real estate credit funds, including Nisus Finance, PAG Asia, ASK Property Fund, and HDFC Capital, actively pursuing greater investment opportunities in the residential sector.
During the first quarter of 2024 (January-March), the residential property market saw notable expansion attributed to increased supply from reputable developers, stable economic conditions, and favourable buyer sentiments.
Residential property sales reached a historic peak in Q1 2024, recording a remarkable 20% surge compared to the same period in 2023, totalling 74,486 units sold. This marks the second consecutive quarter, where sales surpassed 74,000 units, following the exceptional performance in Q4 2023 (75,591 units), according to JLL.
