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Pre-Bid cum Investors’ Conference

12th August 2013

“Changing Urban Landscape of Bihar”

DEVELOPMENT OF RESIDENTIAL & COMMERCIAL PROJECTS IN

PATNA ON PPP BASIS

Agenda

1

Background

Project key features and provisions of Bid Documents

I) Residential- cum-Commercial development Project at

• Project #1: Residential at Sector-5, Bahadurpur, Patna along with

Commercial at DS Sector, Kankarbagh, Patna

II) Commercial Development Projects at

• Project #2: L-Sector Kankarbagh, Patna

• Project #3: Hanuman Nagar, Patna

Q&A

Agenda

2

Background








Q&A

Background

3

Bihar State Housing Board

a State level nodal agency

to provide “housing for all”.

Operates under Urban Development & Housing Department (UD&HD), GoB

BSHB envisions to develop 1,00,000 housing units across Bihar in next 5 years

Public Private Partnership (PPP) is the preferred mode

Pilot Projects already approved by State Cabinet

Bids invited for 3 projects

Transaction Advisors:

Deloitte Touche Tohmatsu India Pvt. Ltd. in association with Kapoor & Associates

and ASA Law

Architect Consultants (for Bundled Project):

Black Inc, Ahmedabad

Background

4

Pilot Projects under consideration

Proposed Sites for Development

# Project Type Site Location Site Area Type Proposed Development

1 Bundled Project:

Residential cum

Commercial

Projects

Sector 5, Bahadurpur

(Opp. TV Tower)

10.17

acres Greenfield

• 1,596 Flats

• Commercial Complex

(Mall, Office, Shopping

Complex etc.)

DS Sector, Kankarbagh

(3 Sites)

4.20

acres Greenfield

2 Lohianagar (Kankarbagh)

Sector-S, T, U –Rental

~ 32.35

acres Brownfield

• ~2,488 Flats +

Commercial

3 Bahadurpur Sector-3,6

~ 74.41

acres Brownfield

• ~8,454 Flats +

Commercial

4 Katari, Mustafabad, Gaya

~ 125

acres Greenfield

• ~12,696 Flats +

Commercial

5 Damodarpur, Muzaffarpur

~21.75

acres Brownfield

• ~1,496 Flats +

Commercial

6

a

Commercial

Projects

L-Sector, Lohianagar,

Kankarbagh

1.70

acres Greenfield


(Mall, Office, Shopping

Complex etc.)

6

b Hanuman Nagar, Kankarbagh 0.55

acres Greenfield


(Mall, Shopping

Complex etc.)

RfP

Issued

RfP

Issued

Upcoming

Projects

Agenda

5

Background








Q&A

About the Project – Bundled Project

6

# Factor Description

1 Name of the

Project

Development of:

Residential Property at Sector-5 Bahadurpur, Patna

bundled with

Commercial Property at DS Sector, Lohianagar, Patna

2 No. of

Development

Sites

A. Four (4) sites:

Residential Site ~ 10.17 Acres at Sector-5 Bahadurpur (Patna)

3 Commercial Sites total ~ 4.20 Acres at DS Sector, Lohianagar

(Patna):

o Site A ~2.38 acres

o Site B ~1.13 acres

o Site C ~0.69 acres

3 Proposed

Development

Residential: As per BSHB Architectural design, drawings &

Specifications

Commercial : As per applicable developmental norms

4 Estimated

Project Cost Rs.561 Cr

5 Lease Period 30 (Thirty) Years

6 Lease

Renewals

Renewable with each term of 30 (Thirty) years

No limit on number of Renewals

Bundled Project – Residential Site

7

N

Subject Site

Rajendra Nagar

Railway Station

Bundled Project– Residential Site

8

View of Bahadurpur, TV Tower site and Adjoining TV Tower

Land Area: ~10.17 acres

Bundled Project –Commercial Sites

9

Bundled Project –Commercial Sites

10

DS Sector – Site A Land area DS Sector – Site A Access Road

• Site A approx. 2.38 acres

DS Sector – Site B

• Site B approx. 1.13 acres • Site C approx. 0.69 acres

3 sites with total land approx.

4.20 acres situated at DS Sector,

Lohianagar (Patna)

DS Sector – Site C

Site Plan of DS Sector

11

PPP

PPP Development Model

12

Receives leasing rights for 30 years (comm., grant flats),

Renewable for 30 yrs. each time

Undertakes development of commercial components

such as retail, office development

1 2

3

4

5

Part Revenues to fund cost of development of

residential flats for BSHB

6

7

Players participate in Bidding Process for

Residential cum Commercial Projects

(based on technical and financial qualifications)

Development of Residential Flats 2BHK Flats

Private Developer (get selected) Bihar State Housing

Board

1

2

Land for Commercial Development

Land for Residential Development

3

Allotment of Housing Units (excl. flats under

grant) by BSHB

Flow of PPP related activities undertaken by both parties

O&M for 2 Years and handover to RWA

Earns revenues from commercial spaces & flats

under grant

Role of Bihar State Housing Board

― Provides developer with commercial land parcel on 30 years lease;

― Renew Lease

― All development, earnings, expenditure related rights and obligations to be transferred to private player;

― In lieu of commercial land, developer mandated to develop residential housing for BSHB as per specifications laid down by the Board;

― Net future earnings from the commercial land to form the source of construction cost required for the residential units;

― Allotment rights and obligations w.r.t. residential development (excl. grant flats) to remain with BSHB

Role of Private Sector Developer

― Receives commercial land parcel for 30 years on lease;

― Lease Renewable for 30 years each time on payment of Lease Renewal charges

― No restriction on number of Renewals

― Develop commercial land;

― Retain and manage commercial parcel earnings, expenditure;

― Undertake development of residential housing in line with specifications provided by BSHB;

― Transfer residential property (excl. grant flats) on completion of construction to BSHB;

― Remain responsible for O&M for 2 years and any defects, during the defect liability period (3 years) in case of residential property

14

Joint Development of Residential Flats by Private Developer as per specification laid down by BSHB

Proposed PPP Development – Roles

Selection of Private Player for Bundled Project – Selection Criteria

15

Selection through International Open Competitive Bidding Process

Technical Eligibility Criteria:

I) Minimum Qualification:

Residential Construction/ Development Experience* >= 3.05 Acres in last 5 years;

Commercial Construction/ Development Experience* >= 1.26 Acres in last 5 years;

II) Technical Capacity:

Project Experience of > Rs. 841.50 Cr in last 5 years

At least 1/4th from Eligible Projects (> Rs. 112.20 Cr.) in Category 1 and/ or Category 3

III) Financial Capacity:

Minimum Net Worth of Rs.140.25 Cr

Category 1 and 3 would be deemed to include housing, residential townships and mass housing.

Category 2 and 4 (core Sector) would be deemed to include real estate, factory buildings, industrial

buildings, industrial parks, port terminal, airport terminal, railway stations, commercial complexes and office

complexes.

IV) Financial Bidding Criteria:

Highest Premium offered or Lowest Grant quoted in terms of “Number of Flats”

* Proof = clients work orders and completion certificates from Client/Engineer/app. Government Instrumentality

TRANSACTION FRAMEWORK- KEY PROVISIONS OF RFP DOCUMENT

16

Ref. Article Key Provision

Recital Single Stage Bidding Process.

Special Purpose Vehicle (SPV) to be incorporated

Article

2

Scope The Scope of Project includes:

(a)Construction of Project

(b)Sub-leasing/renting/transferring etc. of Assets on Commercial Property {and Flats

under Grant} after COD;

(c)O&M of Commercial Property – during entire period

(d)O&M of Residential Property for 2 years and handing over to RWA

(e)Handing over Residential Property {except Flats Under Grant} to BSHB for

allotment; and

(f) Any other obligations as per agreement

Article

3

Licence

and

Lease;

Sub-Lease

(a) license right to develop, operate and maintain Project

(b) upon COD, lease-hold rights of Commercial Property {and Flats Under Grant} for

30 years

(c) including right to further sub-lease, transfer, grant licence, tenancy rights, similar

relationship


17


Article

3

Renewal Upon expiry of 30 Years, Authority shall renew Lease Rights

Renewal for 30 years upon payment of Renewal Premium


Article

3

Transferability In case of Commercial Property:

Lease Rights are also transferable after COD

Transfer subject to payment of Transfer Dividend

Sub-Lease, tenancy, grant licence, similar arrangement allowed under

intimation to the Authority

No Transfer Dividend payable in case of Sub-leases/ creating tenancy/

granting licence rights etc.

Article

7

Representati

on and

warranties

For the Developer:

Selected bidder/ Consortium & Associates, to hold mini. 51% Equity;

each member to hold (i) 26% Equity and (ii) 5% TPC during Construction

Period & 3 years thereafter

Article

9

Performance

Security

Rs. 22.44 Cr

To remain in force till 3 months after Defect Liability Period (DLP)


18


Article

12

Construction Architectural design and drawing for Residential Property made available

by the Authority at the time of bidding to be followed.

Structural design and drawing for Residential Property made available by

the Authority at the time of bidding to be taken as reference only.

Developer to get Structural design & drawing proof checked by NIT or IIT

Bonus for early completion of Construction

Article

17

O&M Developer solely responsible for O&M of Commercial Property

O&M of Residential Property for 2 years from COD

Authority to ensure incorporation of RWA/ society/ association etc.

Developer to hand over the O&M work to RWA

Article

18

Safety

Requirement

Developer to comply with the Safety Requirement, rules, directions and

guidelines

IE to perform Safety Audit

Article

20

Independent

Engineer

Authority to appoint the I.E., before Commencement of Works

Cost of I.E. to be borne equally between the Authority and Developer

Article

21

Financial

Close

Developer to achieve Financial Close within 180 days from Signing of

Agreement

in the event of delay, entitled for further upto 60 (sixty) days, as per DLA


19


Article

22

Marketing/

Allotment/

Booking

Advance Booking:

Entitled to commence booking on Commercial Property after Appointed Date

Also entitled to commence booking of Flats under Grant upon 65% construction

completion

Sub-lease/ transfer etc.:

Only after COD, may execute Sub-Lease Deed, Licence agreement, tenancy

agreement

Flats Under Grant:

• A tri-partite agreement shall be executed amongst Authority, Developer

and transferee in case of Flats Under Grant

• No Transfer Dividend for first transfer

• Payable for subsequent transfers

Commercial Property:

• lease rights transferable with prior permission and upon payment of Transfer

Dividend after COD

Article

24

{Premium}

/ {Grant}

Developer may offer Upfront Premium in the form of Cash OR

Seek Grant in the form of ……number(s) of residential flats (“Flats under Grant”)

out of the Residential Property plus nominal Cash Support in the range of Re. 0 and

Re. 5,00,000/-*

*Nominal cash support to avoid tie-bidding

No roof-top rights, No change in Architecture and Civil structures of Flats under Grant,

Interiors incl. internal finishes, fittings can be modified in case of Flats Under Grant;


20


Article

32

Termination In the Event of Developer Default –

During Construction - NIL

During Operations - 65% of Fair Value of Assets*

*Net of insurance cover& Grant Recovery

In the Event of Authority Default –

• During Construction - 100% of Fair Value of Assets*

• During Operations - 100% of Fair Value of Assets*

*Net of insurance cover

Article

34

Defect Liability Residential Property = 3 years from COD

Agenda

21

Background








Q&A

About The Project

22

Lease for Commercial Development of :

• approx. 1.70 acres of Land at L- Sector in Kankarbagh, Patna &

• approx. 0.5463 acres of Land at Hanuman Nagar in Kankarbagh, Patna

# Factor Description

1 Name of the

Project

• Commercial Development at L- Sector in Kankarbagh, Patna

• Commercial Development at Hanuman Nagar in Kankarbagh, Patna

2 No. of

Development Sites

• L Sector Project : One site ~ 1.70 Acres of land

• Hanuman Nagar Project: One site ~ 0.55 acres

3 Total Built up Area • L Sector Project : Approx. 17,200 Square Meters, FAR = 2.5

• Hanuman Nagar Project: Approx. 5,527 Square Meters, FAR = 2.5

4 Estimated Project

Cost (in INR crore)

• L Sector Project : Approx. INR 59.74 Cr

• Hanuman Nagar Project: Approx. INR 15.71 Cr

5 Lease Period • 30 Years

6 Lease Renewals Renewable with each term of 30 (Thirty) years


About The Project – L Sector Project

23

About The Project – L Sector Project

24

L Sector site area – 1.70 acres L Sector site – Frontage

About The Project – Hanuman Nagar Project

25


26


27

Hanuman Nagar site area – 0.546 acres

Hanuman Nagar site frontage Hanuman Nagar site access

PPP Development Model

28

Leasing rights for 30 years

Renewable - 30 yrs. each time

Undertakes development of Commercial Components

Earns revenues from sub leasing of commercial

spaces

1 2

3

4

5 6

Players participate in Bidding Process for specific

project(s)

(based on technical and financial qualifications)

**Earns**

• Lease Premium (one time) +

• Fixed Annual Lease Rent (Notional amount)

Private Developer (get selected)

1

2

Land for Commercial Development

Bihar State Housing Board

PPP

Flow of PPP related activities undertaken by both parties

Selection of Private Player for Bundled Project – Selection Criteria

29

Selection through International Open Competitive Bidding Process

Technical Eligibility Criteria:

I) Technical Qualification: (In last Five Years)

L-Sector Project: Commercial Construction/ Development Experience >= 34,440 Sq Mt;

Hanuman Nagar Project: Commercial Construction/ Development Experience >= 11,054 Sq Mt;

II) Financial Capacity:

L-Sector Project: Minimum Net Worth of Rs.14.94 Cr

Hanuman Nagar Project: Minimum Net Worth of Rs.3.93 Cr

III) Financial Bidding Criteria:

Highest Lease Premium. “Highest Bidder” shall mean the Bidder who is offering the highest Lease

Premium.


30


Recital Single Stage Bidding Process.

Special Purpose Vehicle (SPV) to be incorporated

Article

2

Scope The Scope of Project includes:

(a)Construction of Project

(b)Sub-leasing/renting/transferring etc. of Assets on Commercial Property after COD;

(c)O&M of Commercial Property – during entire period

(d)any other obligations as per agreement

Article

3

Grant of

Development

Rights

(a) Lease right to develop, operate and maintain Project

(b) Lease Period of 30 years from Appointed Date

(c) including right to further sub-lease, transfer, grant licence, tenancy rights, similar

relationship

Article

3

Renewal

Upon expiry of 30 Years, Authority shall renew Lease Rights

Renewal for 30 years upon payment of Renewal Premium



31


Article

4

Change in

Ownership

For the Developer:

Selected bidder/ Consortium & Associates, to hold mini. 51% Equity;

each member to hold 26% Equity till 3 years (three years) from achievement of

Commercial Operation of the Project

Article

6

Consideration Nominal Annual Lease Rent Rs.1,50,000/- for L Sector

Rs.50,000/- for Hanuman Nagar Site

Upon Renewal after 30 Years, Annual Lease Rent at increased rate

Article

13

Performance

Security

Rs. 2.99 Cr for L Sector Project

Rs. 0.79 Cr for Hanuman Nagar project

To remain in force until 6 months after issuance of Completion Certificate

Article

14

Construction Developer to obtain and maintain all Applicable Permits

O&M Developer solely responsible for O&M

Developer to prepare, maintain & update an Asset and Project Utility register

Article

15

Drawings Structural design & drawings of Assets and/or Project Facilities to be proof-

checked from IIT or NIT, prior to construction


32


Article

17

Completion of

the Project

Project Completion : on or before the expiry of 24 months from Appointed

Date

Completion Certificate to be issued only after utilization of mini. 75% FAR

Article

19

Marketing/

Allotment/

Booking of the

Assets

Entitled to commence booking after executing Lease Deed

Lease rights transferable with prior permission and upon payment of Transfer

Dividend after COD

Sub-Lease of Assets on the Commercial Property to comply with the following:

All amount from the Sub-Lease to be deposited in the Project Account

Developer solely responsible for the timely implementation of the Project

Article

20

Grant of Sub-

Lease Rights

The Developer shall grant sub-lease, licence, tenancy or similar rights/

arrangements of spaces by way of execution of a Sub-Lease Deed to be

entered into between the Developer and the Sub-Lessee/ transferee

Term of such Sub-Lease Deed or sub-license Deed shall be co-terminus

Developer to maintain a Sub-Lease Register


33


Article 23 Lease Period,

Renewal, and

Transferability

Commercial Property – L Sector and Hanuman Nagar :

Lease Rights transferable after COD

Transfer subject to payment of Transfer Dividend

Sub-Lease, tenancy, grant licence, similar arrangement allowed under

intimation to the Authority

No Transfer Dividend payable in case of Sub-leases/ creating tenancy/

granting licence rights etc.

Article 24 Default,

substitution

and

Termination

In the Event of Developer Default –

During Construction - NIL

During Operations - 65% of Fair Value of Assets*


In the Event of Authority Default –

• During Construction - 100% of Fair Value of Assets*

• During Operations - 100% of Fair Value of Assets*


Agenda

34

Background








Q&A

Open house for clarifications/

suggestions…

35

Selection of Private Player for Bundled Project – Qualification Criteria

36

Project to qualify as Eligible Project:

For a project to qualify as an Eligible Project under Categories 1 and 2:

It should have been undertaken as a PPP project on BOT, BOLT, BOO,BOOT or other similar basis for providing its

output or services to a public sector entity or for providing non-discriminatory access to users in pursuance of its

charter, Lease Rights or Concession or contract, as the case may be;

the entity claiming experience should have held, in the company owing the Eligible Project, a minimum of 26% (twenty

six per cent) equity during the entire year for which Eligible Experience is being claimed;

the capital cost of the project should be more than Rs. 112.20 Crores (Rs. One Hundred Twelve Crores and Twenty

Lakhs only); and

Payments/receipts of less than Rs. 112.20 Crores (Rs. One Hundred Twelve Crores and Twenty Lakhs only)

shall not be reckoned as payments/receipts for Eligible Projects

Factors for Experience across categories

Categories Factor

• Category 1: 1.25




*real estate would include dwelling units as part of industrial estates & other industrial infrastructure such as SEZs/Industrial Parks, institutional

infrastructure development such as schools, colleges, universities, IT-ITeS Campuses/ Hostel buildings etc.; Social/ Rehabilitation projects such as

night shelter buildings, bus shelters, community centers, etc.; hotels, resorts, and serviced apartments, development of amusement parks, recreational

facilities such as planetarium oceanariums, museums, auditoriums, stadiums, etc.; city side development in Airports, i.e. – retail and recreational

construction experience in Airports; development of way side amenities forming part of highway projects


37


Article

43

Definition Some important definition includes:

“Fair Value” means the updated estimated cost of construction of similar assets of equal

size and specifications, calculated in accordance with the schedule of rates applicable to

the works assigned by the Authority to its contractors, less depreciation calculated by

what is known as the Age/ Life method as applicable at the time of Termination, as arrived

at by the independent valuer mutually appointed by the Parties for the purpose. For this

purpose, developer shall submit the design life of the proposed development at the start

of Construction Period, as certified by IIT/ NIIT, and this shall further be acknowledged

and approved by BSHB. This approved design life shall be the basis of calculating

depreciation while determining the Fair Value of assets

“Renewal Premium” shall mean the premium payable on renewal of Lease or Sub-Lease

by the Lessee or Sub-Lessee or right claiming thereunder to the Authority or BSHB which

shall be equivalent to 10% (5% in case of Flats Under Grant) of the prevalent market

value of the proportionate share in land involved in the renewal as Premium and also the

enhanced Lease Rent on the proportionate share of Land for which renewal is sought for.

“Transfer Dividend” shall mean the amount payable by the Lessee (except for granting

sublease, licence) seeking transfer of his right at any time during the currency of the

Lease which shall be equivalent to 50% *[(higher of prevalent circle rate and the price

consideration for transfer) – (allotment premium)].