Unitech sells office space for Rs 500 cr to repay debt

Unitech sells office space for Rs 500 cr to repay debt
Business Standard, May 20, 2009, Page 4 and Economic Times, May 21, 2009, Page 25

BS Reporter / New Delhi

Unitech, the country’s second-largest real estate developer, said it sold an office space in Saket, New Delhi for Rs 500 crore as part of a plan to raise money from asset sales to repay debt.

Unitech sold the office space, which was originally built as the company’s corporate office, to a high networth individual. The entire money is expected to be received by June, a source involved with the sale said.

The realtor has been negotiating the sale of the office property for a few months now and has finally closed the deal, the source said declining to give further details. A company spokesperson declined to comment on the sale.

This is the second such sale by the Sanjay Chandra-owned company in the past two months. Unitech raised Rs 231 crore in April from sale of its 199 room Marriott Courtyard hotel in Gurgaon for Rs 231 to a Delhi based auto Dealer Roop Madan.

Unitech, DLF and other real estate developers are stepping up asset sales in an attempt to cut debt and generate cash to complete unfinished projects. Realtors have relied heavily on borrowed funds to spur expansion in the past but were caught in a trap after a global slowdown curbed demand for office, shop and residential properties.

Unitech, which has about Rs 7,800 crore worth of debt on its books, plans to cut the debt burden by at least by Rs 1000 crore by the end of the fiscal year. Most of the repayment is expected to come from additional capital infusion into the company by promoters and asset sales.

The company aims to raise Rs 1600 crore in the fiscal year ending March 31 from sale of non-core assets including Saket office complex and four additional hotel properties located in Noida, Kolkata and Gurgaon. The developer had earlier indicated plans to raise at least Rs 900 crore by June from such asset sales.

“The cash flow from asset sales will put the company’s financial condition back on track”, said a Mumbai based analyst.

Unitech’s promoters in April raised Rs 1625 crore from sale of shares to qualified institutional investors. The company’s board yesterday approved a plan to allow promoters of the company to infuse an additional Rs 1000 crore into the company through issue of warrants that are convertible into shares at a later date.