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Saturday, January 28, 2012

Phoenix replaces hotels with residences

This story first appeared in DNA Money edition on Saturday, January 28, 2012

Phoenix Mills Ltd (PML), multi-use integrated property developer, is replacing hotel development plans of its hospitality subsidiary with residential due to change in economic scenario since 2007 when the projects were first planned.

Majority of the hotel plans of Phoenix Hospitality Co Pvt Ltd (PHCPL), including the one in Mumbai, have been changed to residential, commercial-cum-retail and residential-cum-hotel developments.

Interestingly, the commercial and retail spaces will be created for sale.

Shishir Shrivastava, group CEO and joint managing director, PML, said, “The environment has changed drastically since then (2007) and Phoenix Hospitality is not developing a few of these land parcels it held as hotel projects. As a result, certain formats have been changed to make the projects more viable. The idea is to monetise the land parcels by developing assets to be sold, replacing hotels which would have eventually ended up debt heavy.”

As per the changed plans, while the Pune land parcel will continue with residential development, the site earmarked for a hotel in Mumbai will be replaced with retail-cum-commercial space.

Similarly, the hotel project at PHCPL’s Bangalore (West) land parcel will be replaced by almost 1 million square feet of residential development. In Chennai, it will be a combination of residential and a small boutique hotel as against a hotel project. PML will, however, construct a 150-room hotel at Agra, as per earlier plans.

PHCPL was set up in 2007 as a special purpose vehicle, through which PML owned stakes in many assets (land parcels) across the country. A majority of these developments were earlier planned to be hospitality assets.

Under the original deal in 2007, PML was to invest Rs350 crore for raising its stake in PHCPL, which then had land parcels worth Rs120 crore.

Since then, PML has invested Rs154 crore in PHCPL and the funds were with the company as share application money.

PML has an option to invest another Rs200 crore and increase its stake to 75% in PHCPL from 56% now.

As for new projects, PML will launch a phase-wise residential project in June 2012 in Bangalore.

Spread across 16 acre, it will comprise nine towers of 30 floors each with two apartments on each floor. In all, the development will house 1,300 residential apartments of 2 and 1/2 BHK and 4-5 BHK, targeting the premium and luxury market segments.

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