ET Wealth
12,248.2567.9
Stock Analysis, IPO, Mutual Funds, Bonds & More

Piramal Realty in talks with DB Group for Rs 1,000 crore deal

The construction work for the proposed 718-metre skyscraper had started after it had got approvals from the civic authority in 2010.

, ET Bureau|
Updated: Jun 11, 2015, 02.04 PM IST
0Comments
The construction work for the proposed 718-metre skyscraper had started after it had got approvals from the civic authority in 2010.
The construction work for the proposed 718-metre skyscraper had started after it had got approvals from the civic authority in 2010.
MUMBAI: Piramal Realty is in advanced talks with DB Group to acquire a prime sea-facing, 2.2 acre plot of land at Marine Lines in south Mumbai for over Rs 1,000 crore. In addition, the Ajay Piramal-led company is also expected to give DB Group 20% of built-up space on the property, two persons familiar with the development said.

“Piramal Realty is currently doing due diligence for the deal and the talks are at an advanced stage, with the terms almost finalised,” one of the persons said. Piramal Realty declined to comment. DB Realty, however, denied the development.

The proposed deal with Piramal Realty comes after DB Group’s decision to scrap its plan to develop India’s tallest 126-storey, five-star luxury hotel on the plot that oversees the Arabian Sea. The group had initially proposed the project under the name of Park Hyatt Tower in 2008. It had acquired the plot located close to SK Patil Udyan at south Mumbai’s Charni Road in 2005 from Suresh Estates, another developer operating in south Mumbai.

The construction work for the proposed 718-metre skyscraper had started after it had got approvals from the civic authority in 2010. However, the project was put on hold in 2011. DB Group will have to seek fresh approvals, including building plan to be prepared by Piramal Realty, and the payment of consideration will be linked to securing these sanctions.

Piramal Realty, founded in 2011, is part of the Piramal Group. It has invested over Rs 4,100 crore in acquiring prime properties in Byculla and Kurla in Mumbai and Thane in the past few years.

This is among first such transactions involving DB Group after its alleged involvement in 2G telecom spectrum scam in 2011. For the past few quarters, the developer has been looking to tie up with other developers to further some of its projects such as MIG colony redevelopment in Bandra suburb of Mumbai. Late last year, the group’s hospitality arm had held talks with another Mumbai-based developer, Sheth Creators, for an agreement to jointly develop a high-end sea-facing residential project on the same plot.

However, these talks did not lead to any transaction. Under the proposed agreement, Piramal Realty will pay about Rs60 crore as upfront refundable deposit to DB Hospitality — which has now been rechristened Marine Drive Hospitality & Realty— as initial consideration, the people cited earlier said. Within two years of this initial payment, DB Group is expected to secure permissions for the proposed project plans and this will be treated as a trigger for payment of the balance over the next few years.

Piramal Realty will execute, brand and market the project, according to the proposed deal, while DB Group will be responsible for approvals from the civic authority. In September 2014, Industrial Finance Corporation of India (IFCI) had put this plot on the block to recover its dues after the developer failed to repay secured debt. IFCI had invited bids under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFESI) Act with a reserve price of Rs606 crore for the plot. DB Group had challenged IFCI’s move to auction the plot and the matter was later referred to the debt recovery tribunal.

Also Read

Inconsistency in transactions between DB group and KTV: ED

Transactions between Kalaignar TV, DB group not genuine: ED

DB Group's hospitality arm, Sheth Creators in joint venture talks for south Mumbai project

Etisalat terms DB Group filing as 'baseless'

Comments
Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links


Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service