Anil Ambani aims at selling or leasing its Mumbai HQ.

By Abhay Shah, Realty Quarter

Businessman Anil Ambani speaks to a global group of private equity firms, including Blackstone and another United States-based fund, to either sell his headquarters in the financial capital or to lease out on a long-term basis, said three people familiar with the development. They said, however, that the site is also in legal trouble.

Ambani intends to return in the south of Mumbai to his Ballard Estate office. The Reliance Center in Santacruz is 700,000 sq ft and can gain as many as Rs.1,500 – 2,000 crores. “Anil Ambani is seeking to sell the estate or may be offering it in long-term lease-both options are available,” one of the individuals said. The Reliance Group “will monetize its real estate to generate fund to pay off debt liabilities after the creditworthiness of different group companies has been reduced.”

Ambani has said lately that the “death of the debt” mantra is followed by Reliance Capital, which owes Rs.18,000 crore debt. This economic year the group intends to decrease its debt in stake-sales by 50%. “A long-term lease should assist the group to raise money rapidly via various leasing agreements, while an outright sale is going to produce windfall funds,” said an executive. “Plans are underway in the next year to free the group debt.” The site has 600,000 sq ft leasable area and has the potential of 1.12 million sq ft floor space index (FSI).

However, the problem is clouded by a legal battle. Following Adani Transmission’s cleared-up of acquisition of Reliance Infra’s retail electricity distribution in 2017, the Maharashtra Electricity Regulatory Commission (MERC) held that, as the Santacruz headquarters had been excluded from the agreement between Reliance and Adani, the latter could not seek concessions to build office space as similar leeway had already been granted to R-Infra.

In addition, a consumers group approached the Appellate Tribunal for Electricity (Aptel) arguing that the land should be transferred to Adani Transmission Ltd or users should receive a concession on its bills equal to selling revenues of around Rs.2,000 crore. The case is pending before Aptel.

“The selling of the Santacruz estate could be a huge legal obstacle for Ambani,” a person in the know said. “When the electricity tribunal determines that the building is owned by consumers because it was paid by tariff concessions, then Ambani could lose the property.”