- Category: Market News
- Created on Monday, 18 July 2011 02:09
- Published on Monday, 18 July 2011 02:09
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The Mahindra Group’s real estate arm will pay close to Rs 270 crore to acquire a three-storey bungalow on south Mumbai’s Nepean Sea Road in which Vice-Chairman and Managing Director Anand Mahindra was born and lives as a tenant. The bungalow, named Gulistan, occupies around 13,000 square feet of land opposite Priyadarshini Park and is owned by a special purpose vehicle set up by one of Mumbai’s top builders, Orbit Corporation . Rishi Gagan Trust, whose beneficiary is businessman Om Navani, also has a small stake.
Navani had bought the bungalow from an earlier owner in the early 1980s while Orbit acquired the property in 2008. Arun K Nanda, chairman of Mahindra Lifespace, the real estate arm, said his company has signed a termsheet, or a preliminary agreement, with the current owners and made an advance payment of Rs 11 crore. “The company has a 90-day window to complete due diligence and complete the transaction,” he said. It will have to come to a settlement with its co-tenants that include Bank of Maharashtra , which operates its Nepean Sea Road branch from the premises. Nanda, who became non-executive chairman of Mahindra Lifespace in March 2010 after Mahindra stepped down as chairman, also said the deal amount was not Rs 270 crore.
“It is lower than that,” he said declining to divulge the exact amount. But sources familiar with the transaction explained that the amount included what they described as “settlement amounts” for tenancy rights of four of the building’s tenants. These sources, who did not wish to be named because the deal had not yet been completed, told ET that Mahindra offered to buy the property as the current owner, Orbit, was planning to tear down the old building and build a new one as part of a redevelopment plan. Sources close to Mahindra Lifespace said the company might execute the redevelopment plan itself once the transaction was completed. But this was not certain, these sources added. Mahindra Lifespace executives said the deal was between the two companies and did not involve the group’s vice-chairman.
If the deal went through, the Mahindras would continue to be a tenant, paying rent to Lifespace. He would be compensated with an equivalent space in the new building if and when redevelopment was undertaken. This would be true of the other five tenants, including Bank of Maharashtra. The sources also said the Mahindra family’s tenancy dated back to the times of Mahindra’s grandfather KC Mahindra. Currently, Anand Mahindra lives in the bungalow....