IL&FS Readies To Auction Its HQ in Mumbai's Bandra Kurla Complex

Moneylife Digital Team 07 September 2020

Economy & Nation

Crisis-hit Infrastructure Leasing and Financial Services (IL&FS) is soon commencing auction of its iconic headquarters located at the Bandra Kurla Complex (BKC) in Mumbai.

Responding to our query, an official from IL&FS says, "IL&FS is in discussion with its advisors and will soon be commencing public sale process for its BKC HQ - The IL&FS Financial Center (TIFC). Distribution of all sale proceeds will be done in accordance with National Company Law Appellate Tribunal (NCLAT) approved resolution framework."

According to media reports, the deal is expected to fetch over Rs1,000 crore to IL&FS. The headquarters building, however, is mortgaged with HDFC Ltd and has an outstanding debt of about Rs400 crore. While IL&FS can repay the debt from the sale proceeds, the resolution framework does not allow the company to enter into any deal with a lender.

Quoting Anuj Puri, chairman, Anarock Property Consultants, a report from Mint says, "Even during these testing times, the BKC office market was active with an office space of 7,500 sq ft being bought at Rs40,000 per sq ft.

Large pension funds and private equity (PE) funds are also showing keen interest in acquiring good properties in BKC, which can form a part of the proposed real estate investment trust (REIT) at a later date, considering that the stage is set for REITs in India."

Built in 2005, the IL&FS Financial Centre is one of the biggest commercial buildings in BKC and is the most noticeable one upon entering the G block. Standing 10 floors high, it has a floorplate measuring 40,000 sq ft.

Earlier in July this year, Uday Kotak, non-executive chairman of IL&FS had said that the ongoing COVID-19 pandemic had impacted recovery of loans given by IL&FS Financial Services (IFIN), and also delayed the sale of the real estate assets of the IL&FS group. Mr Kotak also said that the pandemic is likely to impact the valuations of the realty assets.

However, despite the obstacles posed by the pandemic, the IL&FS group expects to address about Rs57,240 crore debt out of the total debt of over Rs99,000 crore. The revised estimate is well above the 50% mark of the overall debt.

The aggregate value of debt being addressed is now estimated as over Rs57,000 crore, with around Rs50,500 crore likely to be addressed by March 2021. The rest of the unaddressed or unresolved amount would be taken as a haircut.

IL&FS has, till 30th June, addressed the debt of Rs17,640 crore from a combination of completed asset sales, debt repayment to green entities, debt discharged in non-green entities and available cash balance across the group.

Further, the sale of 15 entities is in advanced stages with resolution of over Rs8,500 crore.

Efforts towards resolution of additional debt of Rs6,600 crore are likely to continue beyond FY20-21, as the board expects the resolution of major holding companies to take a longer time.

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