Reliance Communications to spin off real estate business

Reliance Communications says the separation of its real estate assets will not have any impact on its profitability since this land wasn’t being used for its telecommunications-related business. Photo: Hemant Mishra/Mint
Reliance Communications says the separation of its real estate assets will not have any impact on its profitability since this land wasn’t being used for its telecommunications-related business.

Mumbai/Bangalore: Reliance Communications Ltd (R-Com), the mobile telephony arm of the Anil Ambani-led Reliance Group, said on Sunday that it will separate its real estate assets into a new entity to be called Reliance Properties Ltd.
The new entity will be listed and existing shareholders of R-Com will receive shares in Reliance Properties on a pro-rata basis that will be tradeable on the bourses, a statement issued by R-Com said.
R-Com said the value of real estate that it can develop was around Rs.12,000 crore, or Rs.60 per share of R-Com.
The primary assets that R-Com is looking to develop is a 135acre piece of land at R-Com’s Dhirubhai Ambani Knowledge City in Navi Mumbai and a 4-acre property in Connaught Place, New Delhi.
R-Com said the separation of its real estate assets will not have any impact on its profitability since this land wasn’t being used for its telecommunications-related business.
The company said it will be working with international partners to develop these assets. The telecom firm had earlier signed an agreement with China’s Wanda Group to co-develop some of its real estate assets.
The move will also help the company to focus on its wireless and enterprise businesses and the R-Com’s board of directors has constituted a committee to work out the details of the demerger, which will be subject to necessary court and shareholder approvals.
A number of companies are looking to monetize their real estate assets during a time when companies are stressed and need to generate capital, said Ambar Maheshwari, managing director, corporate finance at property advisory Jones Lang La Salle India.
“The process or mode of monestization differs between companies. A company may sell for immediate monetization, look at joint or co-development of a land that may give consumer 3-5 times or individual development that may take upto five years,” said Maheshwari.
In recent months, there has been a number of large corporations initiating such processes to sell or co-develop their non-core real estate assets.
Consultancies Jones Lang La Salle India and Cushman and Wakefield have mandates from Tata Communications Ltd to sell some of their assets in Mumbai and Chennai. Air India Ltd too has hired property consultant DTZ International Property Advisors Ltd to advise it on how to best sell its assets.
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