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Prestige May Buy Radisson Hotel Project In Bangalore From Partner

09 June, 2010

The IPO-bound Prestige Estates, a south-based real estate major, may be acquiring an under development Radisson Hotel project in the Whitefield suburb of Bangalore. This is part of the company’s efforts in consolidating its hospitality interests – which currently include Oakwood Premier Serviced Residences, Angsana Oasis Spa, and the proposed Hilton Hotel – into a sizable business segment and parked under Prestige Leisure Resorts Pvt Ltd.

A banking source familiar with the development said, Prestige was buying out the 200-key project for an undisclosed amount, which has been put on the block by D K Adikeshavulu, an influential regional politician and Chairman of Tirumala Tirupati Devasthanam (TTD). Prestige is planning to buy the asset from Adikeshavulu’s Chaitanya Property Pvt Ltd, which is the land partner in the 105-acre Prestige Shantiniketan development in the IT/ITeS suburb of Bangalore. Radisson is part of the mixed use Shaniniketan project that also includes a convention centre, 1 million sq ft office space and residential units.

Last year, Duet India Hotels Asset Management had entered an initial agreement to acquire the project from Adikeshavulu, but did not go ahead with the deal.

Chaitanya Property Pvt Ltd, through a subsidiary, was developing the hotel after inking a management contract deal with Radisson Hotel & Resorts in 2005. The delayed project is still under development (between 60-70% completion achieved) and it is not clear whether Prestige will be acquiring it along with the Radisson management contract, or just the project, a second source added.

“The project has suffered long delay with the original promoter putting the property on the block sometime ago,” this source explained.

An e-mail and text message to Prestige Estates CMD Infran Razack did not elicit any response at the time of posting this report.

The development comes even as the parent Prestige Estates is in the midst of an IPO roadshow. Prestige has been working on a Rs 1,200-crore issue since November last year for which it received SEBI approval two months ago. The company has not yet fixed the issue dates given the volataility in stock markets and a perceived lack of appetite for more real estate IPOs in the current environment.

Three brothers – Irfan Razack, Rezwan Razack and Naoman Razack – hold 33% stake each in the firm that plans to use the IPO proceeds to retire debts and for strategic land acquisitions.

Sources said Prestige, backed by intermediate line of credit from a clutch of banks, was looking to scale up the asset base in a bid to buoy valuations. In 2008, Prestige’s cross-town peer and another listed developer Brigade Enterprises Ltd attempted consolidating its hospitality operations into a single entity and had mandated JP Morgan to raise capital for expansion as well as for augmenting shareholder value.

Sectoral observers estimate that there are about 12 real estate firms that are working on IPO, which include names such as Oberoi Constructions, Emaar MGF and Kumar Developers. And most of them are banking heavily on institutional investors, who along with the bankers are now seeking hefty discount in valuations citing volatility in the global markets.


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Prestige May Buy Radisson Hotel Project In Bangalore From Partner

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