Delhi-Based Industrialist Buys 2-L Sq Ft Building That Was To House Debt-Laden Realtor’s Corporate Office

India’s second-largest real estate firm, Unitech, has sold its office building located in New Delhi’s plush Saket area for around Rs 500 crore to an unidentified property investor, after more than six months of negotiations with multiple prospective buyers. Unitech MD Sanjay Chandra said the deal was sealed for more than Rs 500 crore, but didn’t disclose the buyer’s name. However, people familiar with the negotiations pegged the deal at Rs 425-450 crore and only identified the buyer as a Delhi-based industrialist.

The buyer plans to let out space in the 2-lakh sq ft building, which is ready and was earlier meant to house Unitech’s corporate office, to other companies. Unitech’s present corporate office is located in Gurgaon. Unitech had been expecting a price of more than Rs 500 crore for the building and had earlier been in talks with HDFC to sell it. The financial institution has in the past denied holding talks with Unitech on this, but had said the Saket property was mortgaged with it as collateral for a loan worth Rs 30 crore given to the real estate developer. A severe downturn in the real estate sector and an extraordinary level of debt that Unitech had piled on its balance sheet forced the company to put several of its assets on the block, including Saket office building and a hotel in Gurgaon. The downturn, which saw most home buyers and corporates stay away from the property market, made it difficult for Unitech to sell its properties.

After many months of negotiations with several buyers, the company sold its hotel in Gurgaon for Rs 231 crore to a car dealer Roop Madan early this year. Unitech had a total debt of Rs 10,000 crore as of December-end 2008 and found it difficult to keep pace with its repayment schedule. Loans due to several banks and mutual funds were restructured, after the Reserve Bank of India allowed restructuring of commercial real estate loans. As part of its deleveraging process, Unitech also went in for a qualified institutional placement (QIP) to raise around Rs 1,600 crore last month. The company has now announced that it aims to raise further equity in the company to improve its debt-to-equity ratio, which helps in bringing down the cost of funds for the company. Unitech will also issue warrants to the promoters, who plan to pump in Rs 1,000 crore in Unitech to raise their stake, said a company executive on condition of anonymity. The holding of the Chandra family has dropped from 64% to 51% post-QIP as fresh shares were issued to outside investors.

Courtesy:- ET dt:- 21-05-2009