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DLF strikes costliest land deal

August 17, 2007 14:11 IST
DLF Ltd has paid a whopping Rs 1,675 crore (Rs 16.75 billion) for 38 acres of land in west Delhi to DCM Shriram Consolidated Ltd and the Lohia Group.

This is the most expensive land deal in the country so far. It surpasses the Rs 1,582 crore (Rs 15.82 billion) rival Unitech paid for 300 acres in Noida last year.

DLF has shelled out a whopping Rs 44 crore (Rs 4.4 billion) an acre for the land which is located about 5 km from the Connaught Place central business district.

The property, better known as Swatantra Bharat Mills and DCM Silk Mills, was owned by SBM Land Redevelopment Project. DCM Shriram Consolidated and the Lohias had a 50:50 right to the land.

DCSL said it received its share of Rs 837.50 crore (Rs 8.37 billion) on signing the agreement with DLF on Friday. The Lohias did not offer any official comment, but a source in the family said that S P Lohia (of Indonesia-based PT Indo Rama) was the owner of the land.

DLF, the country's largest real estate developer, is looking to realise around Rs 12,000 crore (Rs 120 billion) from development at the site.  A senior executive of DLF said the sale was "not a land deal, but a project deal on perpetual lease basis." The company said it funded the deal through internal accruals.

SBM Land Redevelopment had earlier forfeited 74 acres, nearly double the land it sold on Friday, to the Delhi Development Authority on the orders of the Supreme Court.

Ajay Shriram, chairman and senior managing director, and Vikram Shriram, vice chairman and managing director, said: "The sale represents a well considered exit option at a satisfactory price. We intend using the cash realised from this transaction to part fund our expansion plans and new initiatives, while simultaneously enhancing the quality of our balance sheet."

DLF earlier acquired 27 acres in the vicinity of this newly-acquired land. Two acres were bought from Pure Drinks.

The company plans to develop 3 million sq ft of office space in its infotech special economic zone, 2 million sq ft of retail and approximately 5 million sq ft of high-end residential units, which totals to about 10 million sq ft of saleable and leasable area.

According to internal estimates, Friday's acquisition together with the contiguous plots acquired earlier, will add Rs 4,000 crore (Rs 40 billion) to DLF's net asset value. It will also increase the NAV of the existing IT SEZ project by Rs 1,000 crore (Rs 10 billion).

This new development will be surrounded by a 121-acre greenbelt, which DLF is hoping will increase its asset value. It also has an excellent catchment from certain such prominent residential localities as Punjabi Bagh and Rajouri Garden.

BS Reporter in New Delhi
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