The company will be funding the entire transaction through internal accruals, and has already made a payment of R300 crore. The remaining sum is to be paid by March 2014, however, the company intends to close the transaction by January next year, its senior management told newspersons.
Located on the corner of Grosvenor Square, the landmark property is in the heart of Londons West End and is said to be one of Mayfairs most prominent buildings, and among the topmost costliest addresses in the world. The building first served as the High Commission for the United States of America and subsequently, as the High Commission for Canada.
The property, spread over 0.67 acres, is expected to have a saleable area of 1.50 lakh square feet. The company plans to have a high-end project developed on the land, most likely a mixed-use development with residential and some commercial development.
We have done R14,500 crore of sales in the last 18 months and will be using that to fund this transaction, Lodha Group deputy managing director Abhinandan Lodha said. Lodha clocked sales of R8,700 crore in FY13.
As for the pricing in the project, he said, the current price in the location is 5,000 a square foot (R5.1 lakh a square foot). The company plans to launch the project in the next six to nine months. The construction will also be funded through internal accruals, Lodha said, without giving more details.
The property was in high demand, with more than 100 viewings and more than 20 bidders during the first round of bidding on November 15, according to a foreign media report of Financial Post published on Ottawa Citizen Website, quoting Simon Stone, development director of Savills. Savills, a UK consultant was the advisor to the Canadian government on the sale. Lodha was advised on the transaction by Knight Franks London office.
The transaction was closed late Thursday evening, after Lodha said to have outbid global companies hailing from West Asia, North America, Asia, Europe, as well as the UK.
According to Lodha, the company was scouting for a property in London for over a year and is looking at a larger play in the Londons premium realty market. He said, when the company was looking to have overseas presence, it examined London, Singapore and Malaysia, and pinned on London as it fits the companys strategy of a global city with international presence and a resilient and mature market.
The company has hired Tyler Goodwin, the former managing director of JPMorgan, as the new chief executive officer of its UK business.
This deal has made Lodha the first Indian real estate developer to have bought such a high-profile property in a mature market like London.
The company has been in the news for the last year and a half for closing some very prime and high-valued assets in India also, like acquisition of DLFs 17 acre land plot in central Mumbai area of Lower Parel for R2,725 crore, US Consulates Washington House, a landmark heritage building for R341.82 crore, located in Altamount Road, one of the costliest addresses in the world.
This is a game changer transaction for Indian real estate. So far Indian companies have gone to Dubai and Malaysian markets, but never entered mature markets like London and New York. If the project is executed well, this would give a lot of credibility to India as well, Cushman & Wakefield executive MD (South Asia) Sanjay Dutt said.