The Plaza Centers Group has sold its commercial project in Pune, Koregaon Park Plaza, in a deal valuing the asset at €40.5 million or $54.5 million. London Stock Exchange-listed Plaza Centers N.V, an emerging markets property developer, said it will get tranche-based cash payments of $25 million over nine months after settling the loan for the project.
The buyer of the asset was not disclosed by Plaza Centers, which invests in Central and Eastern Europe region (CEE) besides India. This is the second sale by the company after it sold its 50 per cent stake in an office complex project located in Pune for $22.5 million in May this year. It also owns stake in residential projects in Bangalore, Chennai and Kochi.
"Following the repayment of the outstanding related bank loan, Plaza will receive aggregate gross cash proceeds from the purchaser totaling circa €18.5 million which will be paid in several installments during the next nine months. Subject to fulfillment of certain conditions, including a consent from the financing bank, the company expects to collect circa €10 million in two months and the remaining consideration in the first half of 2014," said Plaza in a filing.
Koregaon Park Plaza was formed as an equal joint venture between Plaza Centers and local developer Avinash Bhosale. In 2008, while the project was still in construction, Plaza Centers bought out partner Bhosale for $20 million to gain complete control of the project. The project was formally opened in March 2012.
Plaza Centers is an indirect subsidiary of Elbit Imaging Ltd, an Israeli public-listed investment holding company with interests in real estate, medical imaging, hotels, shopping malls, and retail.
“The agreement to sell Koregaon Park is a positive result for Plaza, while financing in India continues to be extremely expensive. This second exit in India follows the disposal of our office complex in Pune, Maharashtra, earlier in the year and is in line with our ongoing strategy to deleverage our balance sheet and recycle capital, primarily through the disposal of non-core assets," said Ran Shtarkman, president and CEO of Plaza Centers N.V.
(Edited by Joby Puthuparampil Johnson)