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IL&FS eyes Rs 1,500 crore from sale of headquarters in Mumbai

Crisis-hit IL&FS will invite initial bids for selling its corporate headquarters in Mumbai’s Bandra-Kurla Complex (BKC) later this month, about two years after the debt-laden infrastructure lender went bust, two people with direct knowledge of the development told ET.

The company is looking to monetise the high-end office property by the end of this financial year and the deal is expected to fetch around Rs 1,500 crore. While discussions about monetising the property in the heart of Mumbai’s new central business district have been on for some time, IL&FS has now started the process with a definitive timeline in place. “This is an NCLT-monitored process; so a lot of approvals are needed at every stage. It could be very time consuming but they are hoping to attract bids by the end of next month,” said one of the persons cited above. The iconic 10-storey property was one of the first structures to come up in BKC, which is the de facto Central Business District of the country’s commercial capital. The office building with around 4.5 lakh sq ft of leasable area counts IBM, IDFC, The Carlyle Group, Avendus and Paypal among its list of key tenants. Around 40% of the building is occupied by offices of IL&FS Group companies and these are expected to be vacated in the due course as the deal reaches closure.

The company has roped in international property consultant CBRE South Asia as the advisor for the proposed transaction. Earlier this week, the company also put two 28-storey commercial towers in Gujarat's Gift City on the block. The government appointed board of IL&FS is monetising these assets with an objective to manage its debt obligations.

“IL&FS is in discussion with its advisors and will soon be commencing the public sale process for its BKC HQ - The IL&FS Financial Center (TIFC),” IL&FS spokesman Sharad Goel said in response to ET’s email query. “With regards to Gift City, the sale process for pre-leased office spaces in Gift 1 and 2 has been initiated this week and expression of interest is expected by October. Thereafter, the sale process for remaining office spaces in Gift will begin. The distribution of all sale proceeds will be done in accordance with the NCLAT-approved resolution framework,” Goel said.

The Uday Kotak-led IL&FS board told the media in a video conference last month that it plans to recover Rs 50,500 crore of loans, or about half of the Rs 1 lakh crore total dues, by March 2021.

In a presentation, the board said it plans to recover Rs 900 crore by the sale of real estate assets by March 2021 and a further Rs 1,200 crore through more such sales beyond that date.

The headquarters building itself is mortgaged with home loan company HDFC for loans outstanding of Rs 400 crore and the sale proceeds will also be used to pay off those debts.

According to consultants, the commercial property is expected to attract good interest even during the ongoing pandemic given its prime location with BKC and the unabated interest of global funds in Indian commercial real estate. Last year, Blackstone had purchased one of the three wings in ONE BKC at Rs 2,500 crore. Even during the current pandemic and lockdown, BKC has witnessed key commercial space transactions in the country. Recently, a Brookfield Asset Management company acquired the two-floor office space of Jet Airways in Godrej BKC for Rs 29,000 per sq ft.


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