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Apr 25, 2012, 02.48 PM IST | Source: CNBC-TV18

Godrej Prop-GIC call talks off to invest in BKC project

Godrej Properties and the government of Singapore have called off talks to invest in Godrej and Jet’s much publicized Bandra Kurla Complex project, reports CNBC-TV18’s Priyanka Ghosh.

Godrej Properties and the government of Singapore (GIC) have called off talks to invest in Godrej and Jet’s much publicized Bandra Kurla Complex project, reports CNBC-TV18’s Priyanka Ghosh. 

Godrej Properties has always been looking for project financing for this particular project, which is in partnership with Jet Airways . Two contours of transaction are being discussed with GIC. One is that they would sell stake in the project to raise about Rs 500 crore and the other is that they could sell the entire building to GIC. This move would fetch them a higher value of about Rs 1,500 crore.

Sources indicate, either ways after about six months of negotiations, this deal is completely off the table at this point in time because GIC thinks this is now a financially unviable deal for them.

What went wrong?

Godrej was supposed to buy additional floor space index from MMRDA for this particular project. They were going to buy four additional FSI, which came at a higher cost. Their estimate was about Rs 8,000 for a square foot, but they got it for Rs 12,000 for a square foot. Therefore, this has compressed margins to be made for this project.

This has been coupled with the fact that although this is a prime area, there is now an oversupply situation in Bandra-Kurla Complex, so GIC was reluctant to take a very futuristic position in this particular area.

Meanwhile, when contacted by CNBC-TV18, Godrej Properties refused to comment on the story, but sources say that they still continue to scout for funds for this project.

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