Valuation Services Service Profile and Overview

Transcription

1 Valuation Services Service Profile and Overview India

2 DTZ A Global Overview DTZ s services are provided by an international team of over 10,000 people in 148 cities operating in 43 countries worldwide. DTZ is one of the world s leading real estate advisory groups with a strong presence in Europe, Middle East and Africa, Asia Pacific region and the Americas. DTZ provides its clients an integrated services offering including professional advisory, transactional advisory and consulting & research. DTZ s Indian operations are a wholly owned subsidiary of DTZ Holdings Plc. DTZ Holdings Plc. is the holding company for DTZ's UK and International equity interests & global operations and is listed on the London Stock Exchange with a system wide turnover of USD 1 billion. Key Service Lines DTZ Capital Markets Strong position in the North and Central American real estate capital markets Specialist in investment sales, portfolio disposals, note sales, debt and equity finance, asset management, real estate M&A activities Corporate Finance Corporate and financial advisory Debt funding & structuring Equity funding & structuring Hospitality Focused on advisory and transactional services in Europe, Middle East and Africa (EMEA) Advisory, acquisition, disposal and asset management services on hotel assets located throughout EMEA Assistance in research into every aspect of location, operation, profitability and marketing Residential Specialises in high quality rentals, established homes and new home operations Investment, development, valuation and home search services DTZ Barnicke Offers full service commercial real estate brokerage services to create business value in commercial real estate Clients include tenants, developers, owners, investors, governments and landlords covering all commercial real estate asset classes such as office, industrial, capital markets/investment, retail, hospitality and corporate services. DTZ Pieda Consulting Accommodation and services outsourcing Corporate real estate strategy Management consultancy Urban renewal and development Valuation Services Service Profile and Overview India Page 2

3 Services in India A single window service provider : - Valuation Services Land Bank Valuation Asset Portfolio Valuation Pre-Investment Equity Valuation Entity Valuation Appraisal and Due Diligence Investment Advisory Best Use strategy Equity Placement Transaction Structuring Deal Documentation Corporate Finance Overseas Listing Advisory Project Financing and Capital Restructuring Project Management Strategic Planning New build and Office Fit-out Technical Due Diligence Development Consultancy Programme Management Cost Consultancy Occupier Services Tenant representation Location strategy Transaction closures Performance review Research Economic Overview Real Estate Market Overview City Reports Landlord Representation Strategy Development Market Research & Analysis Project Marketing Negotiation and Closure Portfolio Management Portfolio Advisory & Management Asset Management Risk Management Valuation Services Service Profile and Overview India Page 3

4 Investment Advisory Services Key Strengths Strong global investor/ developer relationships Global investor relationship to enable cross border capital investment Ability to leverage relationships for clients Successful execution of equity placement mandates in India Confidence of prospective debt/ equity providers in our appraisal capabilities, leading to faster financial closure RICS (Royal Institute of Chartered Surveyors, UK) Certification: DTZs approach to valuation, appraisal and due diligence is based on the principles prescribed by RICS which is a globally recognised source of property, land, construction and related environmental knowledge. RICS is one of the most respected and high profile global standards and membership organisations for professionals involved in real estate. ISO Certification DTZ Debenham Tie Leung, London has been assessed and certified as meeting the requirements of ISO 9001:2000. This certificate is for the activities of property and real estate related advice and services including Corporate DTZ ranked No. 1 Global Research house in Real Estate Valuation Services Service Profile and Overview India Page 4

5 Valuation Service Offerings Land-Bank Valuation The hitherto fragmented and largely unorganised real sector did not have adequate access to long term capital. The persistent growth and impending maturity of the Indian real estate market created opportunities and challenges for a vast majority of Indian real estate developers. With the growth of the capital markets and changing regulatory scenario, developers are constantly looking to access public capital markets to increase scale and scope of their businesses by developing appropriate projects on the existing land holdings and keep expanding the land banks in future. DTZ has proven expertise in valuing such land banks based on principles outlined by RICS. DTZ can assist real estate companies to estimate their enterprise value based on their land banks, in line with the guidelines issued by the Securities and Exchange Board of India (SEBI). Pre-Investment Equity Valuation Opening up of real estate sector for foreign direct investments led to unprecedented interest in Indian real estate by private equity players and real estate funds, looking for participating in high growth real estate development business. In accordance with the existing regulatory framework, these private equity players/realty funds have to invest in Greenfield real estate projects, generally by forming Joint Ventures (JV) with domestic real estate development companies. In most of the cases, these JV companies are Special Purpose Vehicles (SPV), formulated to undertake the development of individual projects. DTZ offers its services for independent equity valuation of the SPV s undertaking real estate development in question, taking into account not only real estate parameters but applying the rigours of corporate finance, too. Asset Portfolio Valuation In India, real estate is fast emerging as a viable asset class for investment purposes, especially amongst the institutional investors. With regulatory clarity emerging on investments in income producing/built-up real estate assets, more and more institutional investments are likely to be made in this asset class. As the size of this asset portfolio increase steadily amongst the institutional investments, there will be an increasing regulatory requirements to get their real estate portfolio valued regularly, in accordance with best financial reporting purposes and also to take sound investment decisions. Asset valuation, in India, won t just require a through understanding of the real estate domain but would also need to be carried out within appropriate accounting/ financial framework. DTZ follows globally accepted practices for asset portfolio valuations, which has enabled it to successfully service real estate investors, owners and occupiers across the world, for decades and offers the same expertise to service clients in India. Entity Valuation Investors and foreign developers, who started investing in single asset/project SPV of domestic developers, are now increasingly looking for opportunities to investing directly in the holding company of promoters, rather than investing in individual project level SPV, in order to expand their scales of operations efficiently and effectively. Given the existing regulatory structure, the projects are developed through SPVs, which are held by the holding company and also used to build land banks. Valuation of these holding companies, though primarily based on real estate valuation requires thorough understanding of corporate finance and financial accounting fundamentals. DTZ with its multi-disciplinary team comprising chartered accountants, financial analysts and real estate professionals, has the necessary functional and domain expertise to undertake such valuations to assist investments at the entity level. Valuation Services Service Profile and Overview India Page 5

6 DTZ Proposition DTZ understands the clients requirements of assessing the viability of potential acquisitions, reviewing performance of existing assets/portfolios and offers valuation, appraisal and due diligence advice to a wide range of clients. From financial institutions to occupiers/users select DTZ because of its market understanding and credible approach to valuation. At DTZ we complement our traditional surveying skills with those of corporate finance practices and financial accounting principles, bringing together a range of business experts who are continually developing new and innovative approaches to dealing with valuation issues. Our groundbreaking methodologies have been recognised by both clients and industry analysts alike as providing new and vital understanding of what drives value. Above all, our approach to valuation, appraisal and due diligence is based on the strength of our relationships with clients. DTZ Coverage DTZ has been serving Indian property markets since 2004 and has established an unmatched capability in offering its opinion of value for properties across the real estate components. DTZ offers its services throughout India with focus on almost all components of real estate viz. land as well as under-development and built up properties across commercial, retail, hospitality and residential spectrum. In India, our valuation services provide a depth of experience, skills and personnel to undertake large instructions effectively and efficiently. DTZ s extensive network of offices not only provides us with a deep understanding of local markets but also enables us to undertake larger instructions by quickly applying adequate resources. Our breadth of experience across all sectors is underpinned by a wealth of research that supports our decision-making. Our resources are dedicated to a strong continuing education program and are qualified from some of the industry s leading professional institutions. Valuation Services Service Profile and Overview India Page 6

7 Select Clientele Investors Developers Occupiers Valuation Services Service Profile and Overview India Page 7

8 Select Case Study Case Study - I Client A North Indian diversified conglomerate Asset 10,000 acres of premium township, located outside Mumbai Challenge A pioneering concept aimed at developing an self-contained community addressing the various socio-physical infrastructure requirements like school, hospital, captive utilities (power, water, telecommunications etc.), shopping facilities, and recreational areas. The project envisaged development of a gated community of high end villas, condominiums, an aerodrome, an international school, a hospital, a golf course, a town plaza, hospitality services like hotel and resorts and a business district. The challenge was to understand the market dynamics of such a development, its acceptability and evolve a methodology to reflect this in the final valuation Solution A thorough review of the business plan of the envisaged development was carried out apart from undertaking a detailed survey of the project location. Adequate and appropriate indicators were reviewed to assess the market dynamics for various product categories envisaged within to be developed as part of the project in question. As part of the diligence exercise, planning norms were reviewed, too, to ascertain the conformity of the development plan with the prescribed planning regulations. A rigorous financial modelling exercise was undertaken complementing the corporate finance and accounting principles with real estate valuation guidelines as issued by RICS to arrive at the market value of the project, in context of the project phasing, required capital expenditure and cost of capital considerations. Case Study - II Client A listed development and construction company Asset A portfolio of 17 land parcels aggregating 1200 acres located across cities Challenge The client required an opinion on value on its land portfolio, spread across the cities of Bengaluru, Chennai, Hyderabad and Mumbai, for the purpose of internal evaluation exercise. The challenge was to cover a wide array of different land parcels, located in the prime areas of very active real estate markets. Each of these real estate markets are a conglomeration of several active micromarkets across various real estate segments, with distinct market dynamics, targeting specific customer segments. Being part of a listed entity, adherence to corporate governance norms regarding confidentiality and oversight measures were of paramount importance. Solution The extensive market coverage of DTZ, gave the team requisite understanding of macroeconomic factors driving the real estate markets in each of the cities, where land parcels are located. In accordance with the RICS guidelines and the best valuation practices, DTZ s undertook inspection of each of the subject land parcels and carried out relevant market research to determine prevailing capital values for the subject land parcels by the Market Comparables Approach using transacted/on offer comparable land parcels and Residual Appraisal Approach. The residual valuation approach adopted by DTZ, complemented the established real estate valuation methodology with the rigors of corporate finance, thereby offering a credible and practical assessment of the value of the client s portfolio. Valuation Services Service Profile and Overview India Page 8

9 Case Study Case Study - III Client A trans-national financial institution Asset A part of a cluster of Grade A commercial buildings located in Mumbai Challenge The client, a trans-national financial institutions fund, intended to avail an independent Opinion of the Value of the subject Property, on an as is where is basis. The subject property comprised six floors of one of the buildings in the cluster. The challenge in the exercise emanated from the fact that the property was at the Ready For Fit-out (RFF) stage. Though leases had been signed for couple of floors and the leases were under negotiations for rest of the floors, the subject property had not started generating income, as yet. Thus an appropriate methodology had to be adopted to estimate the fair value of the subject property. Solution In accordance with the globally accepted valuation practices, the subject property had to be valued using Income capitalisation approach. Given the existing status of the subject property, DTZ adopted the Yield Capitalisation approach as against Direct Capitalisation approach. In the approach adopted, a a thorough overview of the Mumbai commercial market was presented, with a special focus on commercial real estate supply and take up dynamics in Mumbai, in general and the concerned micromarket in particular. Based on the trends in lease rentals in the micro-market and in the backdrop of the demand supply dynamics, likely lease rentals for the subject property were estimated. The same were utilised to formulate a cash-flow to identify various revenue and cost streams, for the purpose of estimating the fair market value of the subject property. Case Study - IV Client A trans-national logistics company Asset Multiple assets across India either owned or leased for commercial and residential purposes Challenge The client was planning public listing of its share, and as part of its listing requirements, needed a valuation of all its real estate holdings either owned directly or leased for occupation. The challenge emanated from the volume of transaction, which involved appraising 25 properties across the length and breadth of the country, including the cities of Ludhiana, Jaipur, Delhi, Ahmedabad, Kandla, Kolkata, Haldia, Tuticorin, Chennai, Bangalore, Mumbai, Kochi, Indore, Kanpur and Vishakapatnam. Being part of public listing requirement meant, adherence to established formats of reporting and ensuring rigorous integrity checks on market information collected to ensure its credibility. Solution A multi-location team was formulated in conjunction with DTZ s Hong Kong branch, which visited each of the properties, within the tight time-frame. The exercise involved estimation of profit rents for leasehold properties, in addition to ascertain market comparables of directly owned properties. Each of the appraisers, diligently reported the assessments in a pre-defined format. In this exercise, trans-national teams of DTZ worked together to address the client requirements efficiently and effectively, which helped the client to fulfil its regulatory requirements, without compromising on the tight timelines. Valuation Services Service Profile and Overview India Page 9

10 DTZ India Experience Representative Valuation Mandates Portfolio Valuation Portfolio Valuation Portfolio Valuation of Pragnya Asset Valuation Appraisal and valuation for a portfolio of more than 50 properties spread across India Appraisal and Valuation of a portfolio of 4 properties in the cities of Chennai, Hyderabad and Chennai Annual Valuation of a portfolio of 3 properties in the cities of Chennai, Kochi and Colombo Inspection and Valuation of owned premises of British Council in Mumbai and Delhi Multiple Value Estimation Year : 2009 Year : 2009 Year : 2009 Year : 2009 Land Bank Valuation Pre-investment Valuation Portfolio Valuation Asset Valuation Valuation of land bank of more than 2000 acres spread across NCR comprising nearly 70 projects Valuation of two land parcels in Hyderabad for investment appraisal Appraisal and valuation for a portfolio of 5 properties in Bengaluru, Hyderabad, Kolkata, Chennai and Kochi Valuation of manufacturing facility located near Mumbai for the purpose of bank borrowing A US based Chemical manufacturing Company Asset Valuation Land Valuation Asset Valuation Asset Valuation Valuation of manufacturing facilities located in NCR and Pune for the purpose of pre-acquisition appraisal Valuation of two land parcels in Goa for hospitality development, as part of pre-acquisition appraisal Valuation of manufacturing facility located in Thane Valuation of various income yielding properties as part of bank s preinvestment appraisal process Depreciated Replacement Valuation Year : 2009 A India dedicated RE Fund 10,000+ Acres at Outskirts of 17 Properties across India 3 properties located at North 23 properties across India Market valuation for 10,000+ acre land parcel located at outskirts of Mumbai Market valuation of 17 properties located in Mumbai, Bangalore, Hyderabad and Chennai Feasibility and best use study of multiple projects located at Mohali and Jodhpur Appraisal and valuation for 23 properties across India Year: 2007 Year: 2007 Year: 2008 Year: 2008 Valuation Services Service Profile and Overview India Page 10

11 Contacts We have pleasure in providing this Investment Advisory overview and look forward to the opportunity to discuss your future needs. Should you have any queries or require further information please contact: Ambar Maheshwari Head of Investment Advisory Anuj Nangpal Director Rajeev Bairathi Director Shubhendu Saha Associate Director Copyright DTZ International Property Advisers Private Limited India Valuation Services Service Profile and Overview India Page 11

12 Our offices in India Delhi NCR # 804 Time Tower Mehrauli-Gurgaon Road Gurgaon Tel Fax Mumbai #103 Level 1 Platina G-Block Bandra Kurla Complex Bandra (East) Mumbai Tel Fax Bengaluru Level 3 Featherlite Vista # 8 1st Main Road, Vasanthnagar Bengaluru Tel Fax Chennai # 681 Regus Citi Centre Level 6, Chennai Citi Centre 10/11 Dr Radhakrishnan Salai Chennai Tel Valuation Services Service Profile and Overview India Page 12