Monetisation of India Tourism Development Corporation’s (ITDC) prized property The Ashok here will likely be structured into three separate deals with the hotel to be leased out under one of them.

Two vacant land parcels currently with the hotel will likely be leased out separately for the commercial development of office space and service apartments.

Sources told FE that it will take time for ITDC to float an expression of interest (EoI) for the monetisation as it is sorting out issues such as pending dues to the New Delhi Municipal Corporation (NDMC), staff retirement matters and changes in land use policy for the property.

Also Read: Will The Ashok regain its sheen under a new owner?

Transaction advisor Feedback Infra held a roadshow on August 22 to obtain the views of potential bidders on the models suggested in its feasibility report. Twenty-nine global and domestic reputed players from hospitality, real estate development and investment sphere participated in the roadshow.

“The monetisation of the property will likely be split into three separate deals as market participants want it that way. Hotel chains are interested in The Ashok while real estate developers are keen on the commercial development of the vacant plots,” an official aware of the matter told FE.

Currently, the Centre owns 87.03% of ITDC, Tata Group’s Indian Hotels Company (IHCL) holds a 7.87% stake, while 5.1% is held by others, including retail investors.

Some sections in the government were initially for making the transaction in one deal. The monetisation of The Ashok and its vacant plots were estimated to be about Rs 7,500 crore, consisting of capital expenditure by the public-private partnership concessionaire and upfront lease revenues to ITDC.

Also Read: ITDC’s The Ashok may be offered on long-term lease to private parties

Even as delays in kickstarting the monetisation process become evident, which is typical to many government transactions, the ITDC share price has lost 17.5% since November 25, 2022. It closed at Rs 333.8 on Friday, down 3.62% from the previous closing price.

“The EOI for monetisation will take time due to several issues. ITDC has to sort out property tax issues, legal issues about Ashok land as the original land lease was meant for hotel only (not commercial development) and employee issues concerning retirement,” the official said.

Feedback Infra has suggested three modules for monetisation: Leasing out The Ashok Hotel built on 11.42 acres for 60 years to private parties under an operation, management and development model. The Ashok has a total inventory of 550 rooms, including 160 suites, barely a few hundred metres from the Prime Minister’s residence and the embassies. The winning bidder may have to invest about `450 crore to refurbish the hotel on the lines of global iconic hotels like the Ritz (Paris), the Savoy (London) and the Taj Mahal (Mumbai).

A second land parcel of 1.83 acres will be offered in the design-build-finance-operate-transfer (DBFOT) model on a 90-99 year lease to develop retail-cum-office space with a built-up area of 175,000 sq ft in an integrated building of 5/6 floors.

The third plot of 6.3 acres will be offered on a 90-99 year lease to build serviced apartments with a built-up area of 1.1 million sq ft, having 600-700 units under the DBFOT model.

The redevelopment of the Ashok will contribute to the National Monetisation Pipeline, which seeks to generate upfront revenues/investments of `6 trillion in four years starting FY22.