DLF sells Mumbai plot to Lodha Developers for Rs2,750 crore
13 August 2012
The country's largest real estate player DLF, has sold its 17.5-acre plot at Lower Parel in Mumbai to Lodha Developers for Rs2,750 crore, making a profit of over Rs2,000 crore in seven years.
Both the companies signed a binding agreement on Saturday, according to The Economic Times, which quoted two persons directly involved in the transaction. The newspaper quoted one of the persons as saying that the deal involved payment of the first installment of Rs500 crore on 13 August and final payment of Rs2,250 crore in October.
DLF bought the land in Mumbai in an auction from National Textile Corporation, for Rs702.2 crore, which was at the time touted as one of the costliest deals. The company, with a debt burden of about Rs23,000 crore, decided to exit non -core business in 2011 and also decided to divest the Mumbai land in August the same year.
The deal would help the company reduce its consolidated debt significantly by the end of current fiscal and would be its second deal in the last three months. In June, the company sold its hotel subsidiary - DLF Hotels & Hospitality that owns land parcels in four cities - to a Kolkata-based consortium of Avani Projects and Square Four Housing & Infrastructure Private Ltd in a Rs567-crore deal.
DLF also has two big-ticket divestments in the pipeline - sale of the luxury hotel chain Aman Resorts and its wind power business - to raise over Rs3,000 crore. The deals are expected to be sealed over the next few months and after divestment of Aman Hotel and wind-power business, DLF's income from the sale of assets would be over Rs6,000 crore.
Real estate players had expanded aggressively prior to the 2008 slump, but after that the demand for residential and commercial property plunged sharply and many developers, including DLF, ended up with huge debt obligations. To make matters worse, real estate players found they could not raise funds through equity route.
"Lodha Developers has entered into a binding agreement to acquire DLF's wholly-owned subsidiary Jwala Real Estate, which is the owner of the strategic 17-acre Mumbai textile mill property at Worli," Lodha said in a statement.