Companies: TRC   

Indian property investment fund Trinity is to take a 49% equity stake in a '£56m partnership' to develop a condominium project in the emerging Worli district of Mumbai.

The project’s estimated internal rate of return exceeds Trinity 25% IPO target, with construction scheduled to start in early 2007 and off-plan sales expected to go like hot cakes. Managing director Rak Chugh testifies to a '20-25m' shortage of houses in India and points to a burgeoning mortgage market enabling more citizens to buy. The contract, with an established local builder, means Trinity will invest £11.6m over three years and will get first refusal on any of the builder’s future projects.

Trinity has agreed ten or so partnerships like this, most notably with hotel chain InterContinental. This deal is especially noteworthy as India’s dearth in hospitality is so extreme that, claims Chugh, Bangkok has ‘more hotel rooms than the whole of India’.

Another agreement was signed earlier this month with India's leading developer of infrastructure projects, Infrastructure Leasing and Finance Services (ILFS), where Trinity paid £4.8m for 2.5% of a new ILFS transportation sector investment vehicle. ‘Whenever they develop roads we get options on the land around the roads – it’s a huge real estate opportunity and we get first dibs,’ explains former Lehman Brothers man Chugh. This follows up on a £100m joint venture set up in August to develop infrastructure projects such as ports and airports, and then, like the recent agreement, to develop real estate around these assets.

House broker Numis suggests the recent IFLS deal could add around 7p to NAV over the next three years, meaning the shares are at 0.94 times current NAV and 0.83 forecast NAV.

So, trading down from the 100p at which £250m was raised in April, the shares are valued at less than their cash value and arguably worth buying on a value basis alone. But there is much promise here too: Trinity’s experienced team is signing choice deals, entering a attractive partnerships with big players and, for now at least, the market is booming. Buy.