New Delhi: A property developer that won a bid for a 95-acre plot for some Rs5,000 crore—one of the costliest land deals in India—has asked for time till next year to pay an instalment due in September.
Realty firm Business Park Town Planners Ltd (BPTP), which beat rivals DLF Ltd, Ansal Properties and Infrastructure Ltd and Omaxe Ltd to win the land bid in Noida near Delhi, has sought a second extension for an instalment due in September from the New Okhla Industrial Development Authority that sold the plot in March for Rs4,957 crore.
“We have asked for an extension and will make the payment some time next year,” a company executive said on condition of anonymity but declined to be more specific.
Real estate firms are facing tight liquidity as sales have dropped in the wake of an economic slowdown. Debt, the primary source of funding for developers, has become scarce with banks going slow on lending to the sector. Funding from private equity funds has also dried up because the global credit market meltdown has made funds wary of investing in realty firms.
BPTP was given an earlier extension to pay the Rs230 crore involved by October. Under terms of the agreement with the authority, BPTP is allowed extensions on dates to make the payment.
“The way markets are today, it makes sense to exercise the option that we have of taking an extension. We will, however, have to pay a higher rate of interest of 14% because of the extension,” the company official said. BPTP’s management was earlier looking to dilute stake either in the company or in a special purpose vehicle formed for the Noida project to private equity investors to finance payment for the land. That plan, however, has not met with success.
The firm has already paid Rs1,297 crore, equivalent to one-quarter of the bid, through internal accruals, sale of a 3% stake for Rs250 crore to JPMorgan Chase and Co. and sale of an undisclosed stake in special economic zones it is developing. This amount comprised the first instalment of Rs1,250 crore and interest levied on the amount because the company delayed the payment from April to July. The remaining money is required to be paid over eight years, in six-monthly instalments.
The land, meanwhile, has not yet been handed over to BPTP, Lalit Srivastava, chairman of the Noida Authority, said. “Possession of land can be given once the developer pays 25% of the amount, which BPTP has done,” he said.
“However, they have not yet entered into a lease deed agreement with the authority. The company needs to pay 5% of the total amount (as fee) before the lease deed document can be registered, which they have not done yet,” said Srivastava. BPTP expects possession by December or January, according to the company executive. Earlier, it said it expected possession by September or October.
The delay in gaining possession of land may delay the project that includes building 125,000 sq. ft of office space spread over five towers and a luxury hotel in the first phase.