Twitter
Advertisement

Hotel Leela to sell four hotels to Brookfield for Rs 3,950 crore

AMC to take over hotels in Delhi, Bengaluru, Chennai, Udaipur; deal exclude one in Mumbai

Latest News
article-main
FacebookTwitterWhatsappLinkedin

Brookfield, an asset management company and its affiliates, will acquire Hotel Leela Venture's four operational hotel assets in Delhi, Bangalore, Chennai, Udaipur and a land parcel in Agra for a total consideration of Rs 3,950 crore on a slump sale basis. The amount includes all intellectual property (valued at Rs 150 crore) and certain business expansion services (valued at Rs 150 crore) to be provided by the hospitality firm to Brookfield.

In a statement on Monday, Hotel Leela Venture Ltd (HLVL), said that all hotel management contracts currently in operation as well as management contracts for hotels currently under development will be assigned to the investor. The promoters will also transfer the Leela brand to Brookfield for all hospitality businesses.

Vivek Nair, chairman and managing director, Hotel Leela Venture Ltd (HLVL), said, "The brand (Leela) will receive a boost and be further strengthened and continue to be known for its world-class services."

The deal excludes the flagship Mumbai hotel, which will continue to be operated by HLVL. The hospitality firm will also own land parcel in Hyderabad and the joint development project of residential apartments with Prestige Developers in Bangalore.

The proceeds from the transaction will be utilised for repayment of dues the hospitality firm owes to lenders. "Post the completion of this transaction, all borrowings from banks and financial institutions would stand repaid," HLVL said in a statement.

The transaction includes execution of a licence agreement and centralised services agreement with the investor in connection with The Leela hotel situated at Mumbai. This apart, a fresh lease from Leela Lace Holdings Pvt Ltd with Brookfield is being executed for leasehold rights to the land forming part of the larger land admeasuring 24,404 square metres situated at Old Airport Road, Bengaluru.

Ankur Gupta, managing director and head – India Real Estate, Brookfield Asset Management, said, "We expect the Leela hotels to continue to be market leaders. We look forward to completing this transaction at the earliest, while ensuring that all operations remain unaffected."

An alternative asset management company, Brookfield has around $350 billion of assets under management, focusing on real estate, renewable power, infrastructure and private equity.

During the financial year 2017-18, the hotel undertakings that are part of the transaction with Brookfield, contributed Rs 591 crore, or 80%, to the HLVL's total income of Rs 743 crore. Their contribution to the total net worth of the company stood at 88%.

The sale of the Leela portfolio to Brookfield, according to Mandeep S Lamba, president - South Asia, HVS Anarock, heralds a new era in the hospitality transactions space and clearly signals a renewed interest from the big players in the Indian hospitality sector.

"For the industry this augurs well and ends several years of stress faced by the promoters, allowing the brand to get a fresh lease of life and an opportunity to further grow the business. Although Brookfield has taken over the ownership of The Leela brand, only time will tell whether it will be retained or the hotels are ultimately rebranded, which seems to be the likely scenario," said Lamba.

A NEW HOST

Rs 743 cr – Total income of Hotel Leela Venture in FY18

Rs 591 cr – The four hotels being sold contributed to HLVL’s revenues

88% – Share of the four hotels to the company’s net worth

WHAT BROOKFIELD GETS

  • All intellectual property valued at Rs 150 crore
     
  • Certain business expansion services valued at Rs 150 crore
     
  • The Leela brand to Brookfield for all hospitality businesses
     
  • Execution of a licence agreement and centralised services agreement in connection with The Leela, Mumbai
Find your daily dose of news & explainers in your WhatsApp. Stay updated, Stay informed-  Follow DNA on WhatsApp.
Advertisement

Live tv

Advertisement
Advertisement