The IL&FS building, its unique glass facade seemingly mirroring BKC‘s emergence as Mumbai’s primary corporate hub in the new millennium, is changing hands, with Brookfield Asset Management offering to pay more than Rs 1,100 crore for the property that has been home to the debt-laden financier for decades.
People with direct knowledge of the development said Brookfield made the highest offer for the 10-storied property that most accurately captures the pronounced northward shift in Mumbai’s financial nerve centre, away from Nariman Point on the southern tip of the metropolis.
The asset is being monetized through a price-discovery mechanism and there was no reserve price set. However, the IL&FS board had estimated the property was worth around Rs 1,200 crore.
“The deal is done. All the documentation and processes will be concluded in the first quarter of the next financial year (2022-23),” said one of the persons cited above.
The Il&FS building was one of the first structures to come up in BKC.
The high-end 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.
The top three floors of the building are occupied by offices of IL&FS Group companies and these are expected to be vacated in the due course as the deal reaches closure.
Both Brookfield Asset Management and IL&FS declined to comment.
The building is mortgaged with mortgage lender HDFC for loans outstanding worth Rs 400 crore and the sale proceeds will also be used to pay off those debts.
Apart from Brookfield Asset Management, several other global and domestic institutional investors had also shown initial interest in buying the asset.
Brookfield has 47 million sq ft of office space across six cities, and also owns The Leela Hotels and Palaces. Overall, Brookfield Asset Management has over $20 billion of assets under management across real estate, infrastructure, renewables and private equity in the country.
IL&FS is monetising its assets with an objective to manage debt obligations. The failure of IL&FS to meet repayment obligations in September 2018 had triggered a liquidity squeeze that gripped India’s non-banking finance sector. As part of a clean-up, the government then replaced the IL&FS board, which has since been engaged in trying to resolve total debt worth over Rs 99,000 crore as of October 2018.
The Uday Kotak-led IL&FS board estimates overall recovery to be around Rs 61,000 crore of the total debt, an upward revision from its earlier estimate of Rs 56,000 crore. Improved valuations, better operating performance and enhanced recoveries from non-group exposures are driving higher recoveries.
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