Unitech in talks to raise Rs 1,100 crore by leasing office space in Gurgaon

NEW DELHI: Real estate firm Unitech Ltd is in talks with various financial institutions to raise around Rs 1,100 crore through lease rent discounting (LRD) of office buildings in its Gurgaon SEZ, which is a part of AIM-listed Unitech Corporate Parks.

The money will be used by the company over the next 12-18 months for construction of assets within the UCP portfolio, which includes five SEZs and one IT park in NCR and Kolkata. The Gurgaon SEZ currently has two million sq ft of ready space and another 1.6 million sq ft is under construction.

“We will increase the pace of construction in these assets by about 50% now,” said Ajay Chandra, managing director of Unitech, which owns 10% of UCP. While Unitech Corporate Parks holds 60% stake in the assets, including this SEZ, Unitech directly holds 40% shares, as a result of which its effective shareholding in the SEZ is about 45%.

Unitech has been considering selling a part of Unitech Corporate Parks’ assets to reduce its debt further but the board of the AIM-listed entity is against the sale currently as it wants to further lease the space, which would help in realising better value when the sale happens.

“The plan to sell the assets is not totally off. The UCP board wants to sell but they feel the desirability for the assets will increase if there is higher leasing. They want the assets to be more mature before selling,” said Chandra, adding that leasing activity has been strong in recent months and UCP is leasing close to two million sq ft space annually.

In recent times, while interest among corporates to take space for expansion of their businesses has been low, Unitech has benefited from many corporates wanting to consolidate their office at one location in order to bring in efficiencies and reduce costs.

The five SEZs in the UCP portfolio will have a total of 17 million sq ft of space when completed. At the moment, four million sq ft has been completed and leased, another two million is leased but under construction and the rest is under different stages of construction.