Realty assets on the block
NEW DELHI: Crisis-hit Reliance Communications Ltd (RCom) hopes to raise over ₹10,000 crore by selling two of its prime properties in order to pare debt, two people familiar with the matter said.
The Anil Ambani-led firm has hired realty services firm JLL to broker a deal for its corporate office in central Delhi and Dhirubhai Ambani Knowledge Centre (DAKC) in Mumbai. The firm is also exploring the option of co-development of these properties, one of the person cited above said.
Both RCom and JLL declined to comment.
RCom has defaulted on some of the payments to its lenders but has received got till December for a strategic restructuring plan under which it will get a sevenmonth breather to service loans amounting to ₹45,000 crore.
The company has said that the debt burden will be reduced to ₹20,000 crore with two deals by September, before the December deadline given by the lenders. RCom said Aircel and Brookfield deals are targeted to close by September 30, 2017 subject to approvals and will reduce debt by nearly 60% or about ₹25,000 crore.
The company has been reeling under a slew of rating downgrades over the last few days, battering its stock.
The Delhi property, Reliance Centre (formerly Hotel Ranjit) on Maharaja Ranjit Singh Marg, is spread over approximately 3.7 acre, and estimated to be valued at up to ₹800 crore. The constructed area of the building is 3,18,759 sq. ft. consisting, four floors and two basements. The property is owned by Campion Properties Ltd, a 100% subsidiary of RCom. Campion signed a share purchase agreement in October 2002 with ministry of tourism for transfer of shares in Hotel Sleepwell Pvt Ltd, an entity that owned Hotel Ranjit). The property is on a 99-year lease with Campion, which it signed with Land & Development office, Ministry of Urban Development in 2002. Annual lease payment to the ministry is about ₹53 lakh.
The Mumbai property, DAKC, is spread over 133 acre in Navi Mumbai, and has a development potential of 13 million sq.ft, including a captive residential area. So far, around 2 million sq.ft has been developed, as per a newspaper ad by the company.
A property consultant who also did not want to be named found RCom’s expectations from these assets “overvalued”.
“Land price around the area (Navi Mumbai) is ₹10 crore per acre. So, the total amount the property could fetch would be around ₹1,300 crore,” said a per- son who is aware of the deal.
DKAC comprises 12 office buildings, two premium buildings with a total size of 6 lakh sq.ft and seven buildings in Millennium Business Park, also part of DAKC. It also houses a lake, helipads, hospitals, ready office blocks, a temple, a 250 room guest house called Hermitage with amenities such as gym, pool, etc. There are also residential blocks. All of these elements should fetch a higher price but even then the company’s expectations appear to be inordinately inflated.
“It is clearly not a barren land. Sale or co-development of the two properties is likely to be completed by end of the calendar year 2017,” said the first person declining to be named.
On June 19, the company also ran an advertisement to sell its around-4-acre Delhi office at Connaught Place.