L&T Realty to ink deal with Nirmal Lifestyle to develop Mulund land
Mumbai: L&T Realty Ltd is close to signing an agreement with Nirmal Lifestyle Ltd to jointly develop a 16-acre plot at Mulund in Mumbai. As part of the deal, L&T Realty would pay an upfront deposit of Rs400 crore to Nirmal Lifestyle, which owns the land, according to two people aware of the development.
The land parcel has a development potential of around 3.2 million sq ft and would be the site of a residential project. While Nirmal Lifestyle would still own the land, L&T Realty will execute the project, said one of the two persons mentioned above.
“The deal is in the final stage. It is in its last leg of closure. Due diligence on the land is taking place right now,” said the person on condition of anonymity.
A spokesperson for Nirmal Lifestyle declined to comment on the deal while L&T Realty did not respond to an email seeking confirmation of the development.
Nirmal Lifestyle, which builds malls and corporate offices apart from residential projects, has been in talks with several developers to monetise its land parcel to repay debt, which stands at over Rs1,000 crore. Proceeds from the transaction are likely to be used to repay part of its debt, the second person cited above said, requesting anonymity.
In December last year, the Mumbai bench of debt recovery tribunal (DRT) directed Dharmesh Jain, chairman and managing director of Nirmal Lifestyle, to not sell any of his property and ordered him to disclose all his movable and immovable assets within a month. This was in response to a petition filed by IDBI Trusteeship Services Ltd to recover dues worth Rs377 crore from the developer on behalf of three clients- Kotak Investments Advisors Ltd, INQ Holding LLC and Equity Trust (Jersey) Ltd.
Several developers have been under pressure in the last three years as sales slowed and debt piled up. A few of the top builders have tried to reduce debt by selling assets, refinancing loans, raising fresh capital, speeding up deliveries to improve revenue, selling development rights and entering development partnerships.
Property advisors and consultants said many builders, including large ones, are looking out for alliances and opting for joint development models to share risk and develop projects faster, after new real estate regulations came into effect on 1 May.
“We will see consolidation in form of joint developments happening in the sector. If it is a clean land and not much construction has happened, there are much more possibility of joint development agreement between builders. Many landowners as well as developers are not ready to take risk now,” said Samantak Das, chief economist and national director (research) at Knight Frank, a property consultant.