Ashok Piramal Group company Peninsula Land has inked a property deal worth Rs 1,200 crore (Rs 12 billion) with Essar Realty Holdings, the realty arm of the Essar Group, to sell and lease premises at its upcoming IT park named Peninsula Technopark on LBS Marg in Kurla. The deal was signed recently, according to sources.
The IT park, to be developed on the land owned by Swan Mills and jointly developed by Peninsula and Swan, has approximately 1 million sq feet of space and houses four buildings. The project is expected to be completed in two years.
Peninsula sold two buildings with a total space of 7 lakh sq feet at Rs 15,000 per sq feet, raising nearly Rs 1,050 crore (Rs 10.5 billion) and will rent a building of 1.58 lakh sq feet at Rs 150 per sq feet, thus making another Rs 150 crore (Rs 1.5 billion).
The revenues from the sale/lease of the fourth building will go towards the repayment of debt raised by Peninsula-Swan JV for developing the land, sources said.
Essar is expected to partly utilise this property for the use of the group companies. Currently, Essar's offices are spread across Mumbai besides Essar House. It plans to consolidate operations in one place in order to save on cost, sources added.
"We were talking to Essar for quite some time. We signed the deal recently after agreeing the terms and conditions acceptable to both of us," company sources said.
Recently, in the highest property deal in the country, Mumbai-based property developer Wadhwa group won the bid to develop a 16,521 sq metre plot auctioned by the Mumbai Metropolitan Region Development Authority (MMRDA), for Rs 831 crore (Rs 8.31 billion), at a price of Rs 45,315 per square foot.
Though the property is located only one kilometre away from the Bandra Kurla Complex, property consultants believe that the Rs 15,000 per sq feet that Essar is paying is justified, since the prevailing rates in the area are around Rs 15,000-20,000. Also, Peninsula could not sell the property to anybody other than a IT/TeS company, sources added.
According to sources, Peninsula is on a fund raising drive to develop nearly 20 million sq ft of land under various stages of development across residential, commercial and retail spaces.
Prior to the Essar deal, Peninsula sold 5,75 000 sq ft of office space to Alok Industries for Rs 1,075 crore (Rs 10.75 billion) at its upcoming office complex in Dawn Mills property in Lower Parel.
Peninsula is also setting up a Rs 700 crore (Rs 7 billion) joint venture with global investment major Lehman Brothers to invest in Peninsula's real estate projects.
While Lehman will invest Rs 500 crore (Rs 5 billion) and hold 75 per cent in the JV, Peninsula Land will subscribe to the remaining equity at an investment of Rs 200 crore (Rs 2 billion).
Recently, Peninsula also sold 10 per cent stake in the company to foreign investors such as Franklin Templeton, HSBC, ABN Amro for Rs 525 crore (Rs 5.25 billion).
Enthused with the reports, the company's stock closed at Rs 153.75, up by over nine per cent over Friday's close of Rs 140.95 and the stock has gone up over 4 per cent in the last month since December 14, 2007.