DLF, Lodha near agreement on Mumbai Textile Mills plot

By Nauzer Bharucha & Rajshri Mehta

MUMBAI: DLF, India’s biggest real estate firm, which is looking to offload its non-core assets to pare debt, has reached an understanding with the Lodha Group to jointly develop its 17-acre Mumbai Textile Mills plot. The exact terms of the profit sharing agreement will be finalized in a fortnight, say sources close to the deal.

The plot has a developable space of 4 million sq ft and Lodha has plans to develop a premium housing project on the lines of Lodha Bellissimo, a 48-storey tower on N M Joshi Marg at Lower Parel. Flats in the area are now quoting over Rs40,000 a squarefoot.

Abhishek Lodha, managing director, Lodha Group, refused tocomment, while Rajiv Talwar, DLF’s group executive director, denied a joint venture with Lodha. Talwar said, “We are in talks with two-three developers.’’

Incidentally, Lodha along with a US-based private equity fund (not Vornado, which had never shown interest in the deal) had earlier offered to pay DLF Rs 2,900 crore for the plot. Though Lodha has a good standing in the investor community, the deal did not materialize due to the tightening global economic conditions and sluggish property marketin India.

Real estate analysts believe the JV, as an alternative, spells good news for Lodha and DLF, whose cash flows are quite stretched. DLF had bought the land from the National Textiles Corporation for Rs702crorein 2005.

It has since considered the feasibility of building a mall, office buildings andeven a residential complex on the plot, before putting it up for sale. The company has a debtof over Rs 22,000 crore.

The cash-rich Lodha Group is building the world’s tallest, 117-storey residential tower in Mumbai. Other Mumbai-based real estate firms, including Sheth Developers, the Avinash Bhosale Group, Oberoi Realty, Piramal Realty and Wadhwa Developers, had evinced interest in the property. The Runwal Group, with backing from HDFC, had also offered Rs 2,400 crore.