Tata Steel to sell Mumbai land to Oberoi Realty for Rs1,155 crore

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Oberoi Realty has emerged as the highest bidder for Tata Steel’s 25-acre land parcel in Mumbai’s Borivali suburb


Tata Steel had launched the bid-cum-auction process for sale of the land parcel on 18 December last year through public advertisements.

Oberoi Realty Ltd has emerged as the highest bidder for Tata Steel Ltd’s 25-acre land parcel in Mumbai’s Borivali suburb, offering Rs.1,155 crore in an e-auction.
The land is located at the junction of Western Express Highway and Dattapada Road in Borivali, a neighbourhood that predominantly comprises medium to high-end residential developments, Tata Steel said in a statement on Tuesday. The company launched the auction process on 18 December. The sale will be concluded after all requisite permissions are obtained, it said.
The land used to house the firm’s steel wires manufacturing plant, which was shut in 2009 as the operations were moved to Tarapur in Maharashtra in 2008.
The e-auction process was completed on Monday, Tata Steel said. Property consultancy firm Knight Frank India was the transaction adviser.
Oberoi Realty said it is awaiting a detailed communication for the next steps in the process.
“Oberoi Realty plans residential development on the plot, which will throw up around 4.5 million sq. ft of saleable area,” said a person familiar with the development, but who didn’t want to be named. “The sale price of homes would be around Rs.12,000 plus floor rise,” he said.
Sandipan Pal, analyst at brokerage firm Motilal Oswal Securities Ltd, said that a big-ticket land purchase by Oberoi Realty had been much awaited since it’s one of the few developers sitting on strong cash reserves. “What will be critical however is how and when they launch the project and how soon cash flow generation happens,” he said.
The deal signals the realty market’s appetite for clear land parcels, even during a time when only a handful of developers are looking to buy land. In the last year or so, the real estate sector has seen a sharp fall in home sales and office space absorption, causing many realty firms to concentrate on effective project execution and cash-flow management instead of investing in new projects.
Last year, Peninsula Land Ltd, an Ashok Piramal Group company, signed an agreement to buy the five-acre defunct mill of Great Eastern Spinning and Weaving Co. Ltd in Mumbai’s Byculla area for Rs.650 crore and the Runwal Group bought a two-acre land parcel from shipbuilding firm ABG Shipyard Ltd in Worli for Rs.245 crore.
The year 2012 also saw some high-profile deals such as Lodha Group buying DLF Ltd’s mill land for Rs.2,700 crore and also acquiring Washington House, the US consulate property on Altamount Road in south Mumbai, for Rs.341.82 crore.
Analysts say it is a good deal for Tata Steel, which is trying to pare its huge debt. The firm had net debt of Rs.70,129 crore on a consolidated basis, for the quarter ended 31 December, it said in a statement on 11 February. This is a 26% increase from Rs.55,854 crore at the end of fiscal 2013.
For Tata Steel, “it is a decent deal and will add to its bottom line because the cost of the land was very low and although from the debt-paring perspective it is comparatively small, it is still a positive for the firm”, said Ambareesh Baliga, managing partner at Edelweiss Global Wealth.
Shares of Tata Steel ended at Rs.366.70 on BSE, up 1.03%, while the benchmark Sensex closed unchanged at 22,055.21 points. Shares of Oberoi Realty ended at Rs.198.70, down 2.65%.

This article taken from Livemint: http://www.livemint.com/Companies/V...mbai-land-for-Rs1155-crore-to-Oberoi-Rea.html
 

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