RCom puts Mumbai, Delhi real estate assets on the block to pare debt

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Mumbai: Crisis-hit Reliance Communications Ltd (RCom) hopes to raise over Rs10,000 crore by selling two of its prime properties in order to pare debt, said two people familiar with the matter.

The company has sought offers from interested buyers and partners through advertisements in newspapers over the past few days.

The Anil Ambani-led firm has hired real estate services company JLL to broker a deal for its corporate office in central Delhi and Dhirubhai Ambani Knowledge City (DAKC) in Mumbai. The firm is also exploring the option of co-developing these properties, said one of the two people cited above. Neither wanted to be identified.

Both RCom and JLL declined to comment.

RCom has bought time till December for a strategic restructuring plan, receiving a seven-month breather to service loans amounting to Rs45,000 crore.

The company has claimed that its debt burden will be reduced to Rs20,000 crore with two deals by September, well before the December deadline. RCom said its merger with Aircel and sale of tower assets to Brookfield will close by 30 September, subject to approvals, and will reduce debt by nearly 60%, or about Rs25,000 crore.

The company has been reeling under a slew of rating downgrades over the last few days that have battered 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 Rs800 crore. The constructed area of the building is 318,759 sq. ft. The property is owned by Campion Properties Ltd, a 100% subsidiary of RCom.

The Mumbai property, DAKC, is spread over 133 acres 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 according to the advertisements.

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 Rs10 crore per acre. So the total amount the property could fetch would be around Rs1,300 crore,” said a property broker who did not want to be named.

In 2015, real estate developer K. Raheja Corp. bought 30 acres in the Ghansoli area of Navi Mumbai for Rs210 crore at Rs 7 crore an acre. It also acquired 62.25 acres in the same area from the Mafatlal Group for Rs355 crore in 2016.

Still, DKAC is a prime property. It comprises several office buildings and residential blocks, the Millennium Business Park, houses a lake, helipads, hospitals, a temple and even a plush 250-room guest house. “It is clearly not a barren land. It is a different world altogether. Sale or co-development of the two properties is likely to be completed by end of the calendar year 2017,” said the first person cited earlier.

The company is also trying to sell its Delhi office at Connaught Place.

The group has been planning to sell most of its real estate assets to raise cash and pare debt. In 2015, it sold nearly 150 residential flats in Navi Mumbai for Rs330 crore.

Some other properties that the group has been looking to sell include those at Kolkata’s Chowringhee Road, 19 acres in Bengaluru and properties in Ambattur, an industrial area near Chennai.