North-based public listed realtor Anant Raj Ltd is selling its 100 per cent equity stake in wholly owned subsidiary Greatway Estates Limited for a total consideration of Rs 304.12 crore ($50 million), the company has disclosed.
The firm did not disclose the name of the buyer but proceeds from the asset sale will be used partly to pay off debt and partly for development of projects.
Greatway Estates owns a property at Bhagwan Das Road in central Delhi, a short distance from the Supreme Court building. It is located close to Connaught Place, one of the key commercial and retail hubs in the city.
Anant Raj, which had a debt of Rs 1,400 crore as on March 31, 2014, is looking to sell its hotel properties across Delhi and land parcels to pare debt. It posted a net profit of Rs 100.38 crore on net revenue of Rs 483 crore for the financial year 2013-14.
In its latest annual report, Ashok Sarin, chairman, Anant Raj, said, “…the company is determined to reduce the debt further in the next couple of years and is considering sale of one or two of its hotel properties and/or hospitality land parcels.”
A number of real estate developers have taken the route of selling non-core assets and land parcels to bring down debt level.
The latest being another north-based developer Parsvnath Ltd. It recently completed sale of a huge land parcel measuring above 100 acres to another developer Supertech for Rs 700 crore. The company which has a debt of Rs 1,200 crore on its book, will use the funds to pare debt.
India’s biggest developer by market value DLF Ltd sold its luxury hospitality chain Aman Resorts for Rs 2,150 crore early this year in an attempt to pare debt. Indeed, it has looked at various routes including fundraising through mortgage-backed securities to cut down its existing debt liabilities. In the past, it has sold its wind power assets as part of divestment of non-core assets. However, those transactions have not allowed the company to make meaningful debt reduction.