Godrej Properties slumps 10% as board approves investment in DB Realty

Shares of Godrej Properties slumped 10 per cent to Rs 1,502.35 in Friday’s intra-day trade after its board approved an investment of Rs 400 crore in DB Realty (DBR), to acquire around 10 per cent stake through the issue of warrants. The stock of the Mumbai-based real estate firm has tanked 16 per cent in the past two trading sessions. The company had after reported a subdued December quarter results as its pre-sales volumes declined 7 per cent year-on-year/ 39 per cent on a sequential basis.

At 09:27 am; Godrej Properties traded 7 per cent lower at Rs 1,556, as compared to 0.10 per cent gain in the S&P BSE Sensex. The trading volume at the counter nearly doubled with a combined 2.2 million equity shares changing hands on the NSE and BSE.

“The board approved a potential investment in DB Realty and also the setting up of a special purpose vehicle along with DBR to jointly undertake slum rehabilitation and MHADA redevelopment projects,” Godrej Properties said in press release on Thursday after market hours.

The company will subscribe to warrants convertible into equity shares aggregating to approximately 10 per cent of the issued and paid-up capital of DBR for an aggregate amount of approximately Rs 400 crore. Godrej Properties and DBR will each contribute an additional Rs 300 crore towards the equity platform focused on redevelopment opportunities in Mumbai, the company said.

The equity platform will act as a strategic special purpose vehicle providing Godrej Properties with ROFR (Right of First Refusal) for all slum rehabilitation and MHADA redevelopment projects to be identified by DB across Mumbai under a 50:50 equity partnership with 10 per cent development management fees to the company. This will provide the company access to a large number of slum rehabilitation and MHADA redevelopment projects in MMR, Godrej Properties said.