Page 170 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Unit 11: Leasing

Under normal circumstances, an owner of property is at liberty to do what they want with their Notes
property, including destroy it or hand over possession of the property to a tenant. However, if
the owner has surrendered possession to another (i.e. the tenant) then any interference with the
quiet enjoyment of the property by the tenant in lawful possession is unlawful.

Caselet Parsvnath offers 1,651 cr for Leasing Prime Rly Land

To develop 15.5-hectare plot in New Delhi's Sarai Rohilla.
Deal Details
Developer to pay amount over 5.5 years for 90-year lease

Required to use 4.5 hectare for building housing and other facilities for Railways.
Can use remaining land to build premium housing, commercial projects, hotels and civic
facilities.
Parsvnath Developers has emerged the highest bidder for developing a 15.5-hectare plot
of the Railways in a key area in the Capital, Sarai Rohilla.
It has offered to pay 1,651.51 crores to the Railways for a 90-year lease of the plot.
From the total plot, the developer is required to use 4.5 hectares for building housing and
other facilities for the Railways. The company can use the remaining 11 hectares to build
premium housing, commercial projects, hotels and civic facilities. Rail Land Development
Authority (RLDA), the nodal agency that is implementing the project, received financial
bids from two players on Thursday. The second bidder was Indiabulls Real Estate Ltd,
which offered around 1,200 crores, said sources in the know.
The winning bidder has to pay up 20 per cent of the amount within the first three months
of receiving the letter of acceptance, after which it has an 18-month moratorium period.
The remaining amount has to be paid off over the next four years. In effect, the amount has
to be paid in about five-and-a-half years.
"We have won the bid for 1651.51 crores," said Mr Pradeep Jain, Chairman, Parsvnath
Developers. On how Parsvnath will fund the deal, Mr Jain said, "For the first two years, we
already have a financial closure…We have FDI backing for this project. Private equity
firm Red Fort Capital will partner with us."

In May 2008, RLDA had awarded the same plot to another firm ABW Infrastructure; but the
project was cancelled after the company defaulted in making timely payments. ABW had
won the bid for 1,026 crores. The company had to pay 50 per cent or 513 crores within
the first month, and the remaining amount was to be paid-up within two years. In effect,
the revised payment conditions in the tender are softer on the developer this time round.

"This is very aggressive pricing. It's good the market is gaining strength," said Mr Manish
Aggarwal, Executive Director-Investment Services, Cushman and Wakefield, India. When
contacted, Indiabulls official refused to comment on the bid.
Source: http://www.thehindubusinessline.in
11.2 Types of Leasing

A lease contract can be classified on various characteristics in following categories:
1. Finance Lease and Operating Lease

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