Source:Swati Deshpande, TNN, Apr 1, 2009, 12.38am IST
MUMBAI: In a major development in the city's sluggish real estate sector, Kotak Mahindra Bank Limited on Tuesday acquired the ownership rights of the 10-story Apple Tower at Bandra Kurla Complex for around Rs 470 crore.
The deal was made as part of consent terms signed before the Bombay high court between the bank and Apple Finance Limited, which owned the 1.5 acre piece of real estate. The building designed by Hafeez Contractor and constructed by Shapoorji Pallonji had come up in early 2000.
The consent terms signed and submitted before Justice R Y Ganoo ended the seven year long legal battle involving Apple Finance and its creditors. The detailed consent terms also included Kotak Prime limited, as one of the parties, since it along with Kotak Mahindra Bank had become the sole debenture holders of Apple Finance. The bank essentially agreed to pay off the creditors of Apple Finance and clear off all its debts too. Apple finance, which was represented by law firm Kanga & Co, therefore agreed to sell off its building to the Kotak Mahindra Bank limited, which was represented by Manilal Ker & Ambalal.
Given the slump in the property market, observers say that Kotak Mahindra Bank may have walked away with a good deal. The possession of the building which is right now with the receiver will be handed over to Kotak Mahindra Bank later. According to real estate sources, the bank has the option of pulling down the building in order to take advantage of the additional floor space index (FSI) granted to BKC recently. The FSI here has been hiked from 2 to 4. The bank could end up shelling out another Rs 175-Rs 180 crore as premium if it chooses to take the benefit of this additional FSI. The existing building has a carpet area of 1.23 lakh sq ft.
In 2002, Canara Bank, the original debenture trustee of the company, had moved the high court to recover over Rs 200 crore which was payable to the debenture holders, mainly the five nationalised banks to whom the property was mortgaged.
The court had appointed a court receiver but efforts to sell the tower through public auctions had not succeeded. In fact, Jet Airways, had also bid Rs 206 crore for the property in December 2005, but it was turned down by the HC last March as being too low after Apple Finance claimed that the market price was Rs 600 crore.
Earlier in 2005, Jet had outbid its rivals for the property and also deposited Rs 51 crore as part of the undertaking to carry out the offer. Its price of Rs 206.10 crore, however, was much less that the reserve price of Rs 250 crore. After the auction, two other companies Financial Technologies India Limited and Parasvnath Developers Limited had approached the court with higher bids of Rs 225 and Rs 235 crore respectively. The court rejected all the bids.
In 1997-98, Apple Finance had issued debentures totally valued at Rs 74.90 crore as security for various loans taken by the banks. When Apple Finance failed to redeem the debentures, the debenture trustee Canara Bank moved high court for sale of the property. In April 2004, the court appointed a receiver and subsequently the property was put for auction.
The property was put up for sale five times but did not fetch high rates. In April 2005 auction, the Lodha Group was the highest bidder at Rs 135 crore.
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