Shriram Properties readies partners to sell Gateway SEZ

Shriram Properties was earlier looking at a $100 mn worth of space to sell, but it has since scaled up the portfolio to include a few more residential and commercial assets so that the deal value rises to $150 mn

Shriram Properties, the Bangalore-based realty arm of the Shriram Group, is understood to have up lined up discussions with key global players including Mapletree and Ascendas to sell its Gateway SEZ, a 1.3 million square feet information technology special economic zone in Chennai for $150 million.

The company was earlier in discussions with Singapore-headquartered Ascendas, which specialises in technology parks, but had to stop the transaction to iron out some key issues.

While Ascendas has a significant presence in India, Mapletree Investments has around $15 billion worth of office, logistics, industrial, residential, retail and mixed-use properties across Asia and has a real estate asset in Bangalore as part of its portfolio in India.

Shriram Properties was earlier looking at a $100 million worth of space to sell, but it has since scaled up the portfolio to include a few more residential and commercial assets so that the deal value rises to $150 million. While Shriram Properties MD M Murali said that they are in talks with various investors to sell the Gateway SEZ, he declined to name the probable candidates. Ascendas and Mapletree could not be reached for comment. It is understood that Shriram Properties may use a part of the proceeds to settle its long-pending Rs 600 crore debt, which was raised from German bank Hypo Real Estate Group during late 2007.

Shriram Properties, on an annualised revenue of close to Rs 850 crore, works on an operating margin of around 23 per cent. It has been strong in the residential segment in south India and looking at aggresively growing its commercial properties over the past few years. The SEZ - IT park has the potential to develop 3.2 million sq ft on the 58-acre land parcel, which Shriram Properties brought from Standard Motors in 2006.

Along with this deal, which has been in the making for the past 10 months, Shriram Properties is working on another PE transaction to raise as much as $100 million for a clutch of projects. It had earlier raised PE funding from marquee global investors such as Walton Street Capital, Starwood Capital Group and Sun Apollo for investments in property development.

Shriram Properties has delivered over 8.36 million sq ft of built-up space, with 12.61 million sq ft to be delivered and 45.85 million sq ft under development across Bangalore, Chennai, Coimbatore, Visakhapatnam and Kolkata among others.

The company is also involved in developing a 20-million-sq-ft integrated project at an investment of Rs 5,000 crore in Kolkatta on a land which previously belonged to Hindustan Motors.