Jaypee Group searching buyers for its hotel portfolio, sale to generate ‘significant’ amount to refund homebuyers

Jaypee Group is planning to put its five-star hotel portfolio on the block to raise over Rs 2,000 crore that may come in handy to pay off homebuyers and debtors, sources said.

"The size and value of the asset is at a sweet spot to fetch a figure which is in proximity to the amount of Rs 2,000 crore that the parent company Jaypee Associates Ltd (JAL) is required to deposit with the Supreme Court registry," they said.

They said that Jaypee Group will have to apply for leave from the Supreme Court before selling these assets once they get an offer on the table. The transaction may take about six to eight months to complete.

Of the five hotels, three hotels are in the National Capital Region (NCR) with two of them being at very prime locations in New Delhi, close to the business districts and posh residential areas and one is in Greater Noida. The two other hotels are located at attractive tourist destinations - Mussoorie and Agra- and both enjoy heavy inflow of domestic and international travellers.

As per the information memorandum document, the project titled Project Pluto talks about a "unique opportunity to acquire a hotel portfolio comprising five premium 5-star hotel assets located at prime location in the major business and tourist destinations of India".

“A unique opportunity to own a sizeable asset portfolio of premium 5-star hotels comprising 867 operational keys with a demonstrated track record of generating healthy cash flows over several years along with potential for addition of 300 more keys,” says the information memorandum that has been delivered to “limited parties who have expressed an interest in acquiring the hotel assets of Jaiprakash Associates Limited”.

Laying down the terms of acquiring the portfolio, the document says that 'it will be a 100 percent acquisition, the acquirer will have complete control on optimisation of the portfolio. The control along with the significant size of the portfolio allows for multiple exit options such as IPO/REIT listing for the acquirer'.

All the hotels are owned and operated by the Jaypee Group, a hospitality, real estate and infrastructure development firm. Its existing portfolio comprises 867 operational keys spread across five premium 5 star hotels which are:  Jaypee Vasant Continental, New Delhi, 119 keys; Jaypee Siddharth New Delhi, 102 keys; Jaypee Palace & Convention Centre Agra, 341 keys, Jaypee Greens Golf Resort Greater Noida, 170 keys; Jaypee Residency Mussoorie, 135 keys.

The hotels in Delhi are upscale business hotels and the hotels in Mussoorie, Agra and Greater Noida are premium/luxury resorts. Further, there is significant a unutilised development potential in their Agra and Greater Noida hotels which can be utilised with limited capex as the basic facilities are already provided for: Jaypee Palace Agra has an unutilised FAR of ~ 0.82 mn sqft with a potential to add 200 rooms. Jaypee Greens Golf resort Noida has an unutilised FAR of ~ 0.25 mn sqft with a potential of adding another 100 rooms, says the investment memorandum.

“The construction of Wishtown was the joint liability of Jaypee Associates Limited (JAL), the parent company and Jaypee Infratech Limited. The sale of these hotel assets of JAL will provide the funds required to fulfill JAL's portion of liability to a great extent towards the construction of Wishtown or for providing refund to homebuyers who will ultimately opt for refund. The unrelenting efforts of the justices of the Supreme Court and their directions against the promoters and directors of JAL are step by step, slowly but steadily, getting the desired results in favour of the homebuyers,” says Abhishek Dubey, an advocate based out of Delhi.

The Supreme Court last Friday extended the deadline for Jaypee Associates, the parent company of embattled Jaypee Infratech Ltd, to deposit an additional Rs 125 crore with the apex court to Jan 25, 2018. The court has set February 1 as the next date for hearing the case. Jaypee Associates had deposited Rs 150 crore with the registry on Wednesday.

At the last hearing on November 22, the Supreme Court had allowed the parent company of Jaypee Infratech Ltd to deposit Rs 275 crore on that day and another Rs 275 crore by December 31 (Rs 150 crore by December 13, 2017 and Rs 125 crore by December 31, 2017).

No specific timeline was given to deposit the remaining Rs 1,450 crore. But the SC order that day did say that “Needless to say that direction for deposit of Rs 2000 crore shall remain as it is. The only indulgence is to pay the same in instalments”.

This was against the earlier order asking the promoters to deposit Rs 2000 crore by November 13 which the promoters were unable to meet even after four deadlines expired.

The amicus curiae of the Jaypee insolvency case, Pawan Shri Aggarwal, was directed by the Supreme Court last month to update the portal where homebuyers who have booked apartments in various Jaypee projects in Noida could register their claims. The portal is open until December 25. The next date of hearing is January 10, 2018.

On September 11 this year, Supreme Court directed Jaypee Associates, the parent firm of its real estate firm Jaypee Infratech, to deposit Rs 2,000 crore by October 27. The apex court also asked the NCLT-appointed interim resolution professional (IRP) to take over the management of Jaypee Infratech and submit a plan to protect the interests of homebuyers and creditors within 45 days.

Also, the National Company Law Tribunal (NCLT) appointed resolution professional (IRP) Anuj Jain has until now received 21 bids from investors willing to pump in at least Rs 2,000 crore to complete the projects floated by Jaypee Infratech that involves nearly 32,000 apartments, plots and villas.

Among the parties that have expressed interest include Adani Group, Hindujas, Sajjan Jindal’s JSW Group, Vedanta Group, Essel Highways, IDFC, Lodha Group, Puravankara, SARE Homes, L&T Infra, Cube Highways from Singapore, Kotak Infra, SARE Group, Deutsche Bank, Asset Reconstruction Company (India) Limited, Suraksha Realty, Tata Realty, National Infrastructure Investment Fund (NIIF) among others.