Lodha to acquire DLF plot for 2.7kcr

MUMBAI: Real estate giant DLF, which is looking to offload its non-core assets to pare debt, has reached an understanding to sell its 17.5 acre Mumbai Textile Mill plot to Lodha Group for Rs 2,700 crore. The two companies took this decision a month after their plans to jointly develop the plot failed over revenue sharing agreement.

The Rs 2,700 crore deal includes the land cost of Rs 1,200 crore and liabilities worth Rs 1,500 crore incurred by DLF since it purchased the plot in 2005. Liabilities means the interests payable to banks, architect design, construction work already carried and various government approval costs, including purchase of incentive parking FSI, from the BMC. The plot has a developable FSI of 5 million sq ft. The deal is expected to be announced this week.

Rajiv Talwar, DLF's group executive director, and Abhishek Lodha, managing director of Lodha Group, confirmed that the two companies were part of the transaction but refused to share details.

Since the full amount is expected to be paid at the earliest, Lodha Group, which is building the world's tallest residential tower of 117 floors, is in talks with HDFC and other banks to raise about Rs 1,000 crore while the balance will be paid from internal accruals. Lodha is also in talks with private players, including HDFC, Singapore's GIC, to raise equity in the project.

Lodha will revise DLF's plans to construct three 90-floor luxury towers and a 17-storey public parking building on the plot. "As DLF had started some construction on the site when the parking FSI scheme was cancelled by the civic body, the company could get a favourable order from the Bombay high court. Since he has to provide public parking, Lodha believes the plot is apt for a mixed use development of commercial, retail and residences for high-end and middle income category,'' said an official close to the development.

DLF had been trying to sell the Lower Parel land for about a year, but was finding it difficult to get the right value. Potential buyers renewed interest in the asset after new development control rules in Mumbai were notified in January, which cleared the air about how much space can be built on the land parcel and the amount of extra FSI that can be bought. DLF bought the land for Rs 702 crore in an auction in 2005 from state-owned National Textile Corporation. It had changed its developmental plans for the plot thrice-from building a retail mall to commercial office buildings to finally a residential project-before it decided to sell it a year ago. DLF and several other builders piled up huge debt when property demand fell during 2008-09.

Lodha and DLF have been in talks for three months. Runwal Group was Lodha's closest competitor with his bid of of Rs 2,400 crore. Oberoi Realty along with Morgan Stanley private equity had also shown interest with a bid of over Rs 1,800 crore.

Source: timesofindia.indiatimes.com