Larsen & Toubro subsidiary inks pact to transfer 15 acres of land to Brookfield

Infrastructure major Larsen & Toubro’s subsidiary L&T Metro Rail (Hyderabad) has entered into a pact with Brookfield Group to transfer around 15 acres of land parcel in the Hyderabad Information Technology and Engineering Consultancy City (HITEC City) to the global institutional investor, said two people with direct knowledge of the development.

The land parcel will be transferred through a nearly 50-year lease for a total deal value of around Rs 1,020 crore.

“The memorandum of understanding (MOU) was inked recently and it also includes a 12-storey commercial tower that was constructed recently. The land is located opposite IKEA’s store in Hyderabad,” said one of the people mentioned above.

The land parcel, including the ready commercial tower, will be added to Brookfield Group’s large portfolio in India, including 50 million sq ft of office space across six cities. It also owns The Leela Hotels and Palaces. Overall, Brookfield Asset Management has over $22 billion of assets under management across real estate, infrastructure, renewables and private equity in the country.

ET’s separate email query to L&T Group and Brookfield remained unanswered until the press time.

Through a concession agreement with the then government of Andhra Pradesh in September 2010, L&T Metro Rail (Hyderabad) was appointed to implement the Project on Design, Built, Finance Operate and Transfer (DBFOT) basis.

“L&T has been looking to monetise more land parcels around the metro project to make it more financially viable,” said the other person quoted above.

L&T achieved financial closure for the project in March 2011, within six months of signing the agreement. A consortium of 10 banks led by State Bank of India has sanctioned the entire debt requirement of the project. This is the largest fund tie-up in India for a non-power infrastructure Public-Private Partnership (PPP) project.

“L&T is looking to reduce the debt incurred on the Hyderabad metro project and become a zero-debt company. The project has a significant component of real estate-related revenue streams like offices and residential buildings,” said one of the persons quoted above.

Hyderabad has become synonymous with pharmaceutical industry-related setups as Bangalore is with the information technology sector and has seen an almost doubling of the land prices in the region over the last one year.

The technology city has also seen increasing land deals, with residential and commercial land deals to the tune of around Rs 5,000 crores having been noted in Hyderabad from January 2020 to January 2022.

The city that houses Facebook and Microsoft has also been attracting large institutional investors like Blackstone Group, Xander Group and CapitaLand as they look to tap into the growing commercial market in the region.