Lodha Developers is set to buy a 10.3-acre plot in Central Mumbai for Rs 710 crore in what could be the single-biggest realty deal this year so far, a sign that the downturn in the real estate sector may have finally bottomed out. Company’s director Abhisheck Lodha confirmed the offer made to acquire the Finlay Mill property belonging to the National Textile Corporation (NTC), but refused to disclose details of the bid value.

The developer is looking to fund the transaction through an initial public offer (IPO) to raise Rs 3,000 crore by August end, said people familiar with the matter. Mr Lodha refused to confirm this saying the funding mechanism is being worked out. “We have received an official letter from them and we are satisfied with the bid,” NTC MD K Ramchandran Pillai told ET. This is the third instance that the Finlay Mill property has been put on the block, and both times the final bidders were unable to meet the reserve price amount or the earnest money. Lodha’s earlier bid for the 10.3-acre mill land was Rs 657.9 crore when the reserve price was fixed at Rs 708 crore. On Thursday, NTC’s asset review committee did not accept Lodha’s bid on grounds that it was much lower than the reserve price.

Lodha, on Friday, communicated to NTC its decision to increase its offer price for the Finlay property. The other bidder in the fray for the property was Indiabulls Real Estate at Rs 520 crore. According to sources familiar with the development, the payment for the Finlay Mill acquisition would be made in three tranches over three months. The deal will be inked between Lodha and NTC in the next 10 days. The first part, which is 25% of the bid amount, will be made in a fortnight from the day the deal is signed.

The second tranche, which will be half the amount, will be made in 45 days starting from the day the first payment is made. The balance will be paid a month after the second tranche is paid. Lodha has already paid an amount of Rs 100 crore as earnest money as part of the bidding process. Lodha Developers’ offer of Rs 710 crore was first reported by ET NOW, this newspaper’s business news channel. The recent large transaction struck in the real estate sector was that of the Hindoostan Mill land in May this year where serial investor C Sivasankaran acquired a 66% stake from DLF for Rs 310 crore. DLF was a part of the SPV, with Ackruti City being the other investor.

In 2007, Mumbai Metropolitan Region Development Authority (MMRDA) struck the then biggest deal of Rs 2,790 crore by selling three plots totalling barely six acres in size. This was the biggest deal in 2007. In 2005, DLF had bought 17.5 acres from NTC in Lower Parel for Rs 702 crore. It is now expected that NTC would put its 16-acre Kohinoor Mill-1 property in central Mumbai on the block with a base price of around Rs 1,200 crore by the end of this month.

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