Brookfield Closes Rs 3,950 Cr Deal with Leela Venture

CANADIAN ALTERNATIVE asset management company Brookfield has bought the assets of Hotel Leelaventure Ltd comprising key hotel properties in Delhi, Bangalore, Udaipur and Chennai for Rs 3,950 crore. The deal culminates more than a year of talks between Brookfield and various stakeholders of debt-laden Hotel Leelaventure, which has been in the middle of financial restructuring.

The board of Hotel Leelaventure approved on Monday the sale and transfer of four of its hotel properties to an affiliate of BSREP III, Brookfield’s latest real estate fund. However, the deal will exclude the hotel in Mumbai while including the land parcel in Agra.

The Brookfield-Leela deal will also entail buying the Leela brand, existing and all upcoming management contracts of Hotel Leelaventure and also absorbing the employees of the four hotels, the two companies said in a joint statement.

Hotel Leelaventure will continue to run its hotel in Mumbai and own certain pieces of land in Hyderabad as well as a joint development project of residential apartments with Bengaluru-based Prestige Developers.

“The Leela is one of the finest hospitality groups in India and over the years it has gained extraordinary recognition from some of the most prestigious authorities on travel and luxury in the world. We are excited with this opportunity and look forward to completing this transaction at the earliest, while ensuring that all operations remain unaffected," said Ankur Gupta, managing director and head-India Real Estate, Brookfield Asset Management.

The hotel company, set up by C.P. Krishnan Nair in 1986, had been looking to pare debt by selling its hotels as well as some of its non-core assets including land parcels. At the end of last financial year, the company’s debt stood at around Rs 3,799 crore. In 2015, Hotel Leelaventure sold its hotel in Goa to a Malaysian investment firm for Rs 725 crore. The company had also put its Chennai and Delhi properties on the block but failed to find a buyer.

Following failure of a debt restructuring plan, the Mumbai-based company transferred its loans from 14 creditors to JM Financial Asset Restructuring Company (JMARC) in 2014.

The announcement of the Brookfield-Leela deal follows the filing of an insolvency petition by JMARC on 26 February against the hotel chain at the National Company Law Tribunal (NCLT) in Mumbai.

For Brookfield, the hospitality deal follows its investments in commercial office, residential assets and infrastructure projects in India. Since its first buyout of Unitech Corporate Parks in 2013, Brookfield has grown aggressively, building and managing nearly 25 million sq. ft of commercial real estate. It has signed some of the biggest real estate deals in India, including acquiring Hiranandani group’s commercial offices for Rs 6,700 crore and Essar group’s Equinox commercial complex for Rs 2,400 crore.

Hotel Leelaventure, which posted a total income of Rs 743 crore during the financial year ended 31 March 2018, at one time competed with the likes of Indian Hotel Company Ltd’s Taj Hotels and EIH Ltd’s Oberoi hotels.

The previous largest hotel sale was in 2014 when DLF Ltd sold Aman Resorts to Aman Resorts Group Ltd (ARGL) for Rs 2,250 crore.

(Source: Mint)