The Ritz Carlton Hotel in Bengaluru, which was developed by NEL Holdings South Ltd (formerly Nitesh Estates), may see a change in ownership as Yes Bank plans to take over the property for non-payment. 300 crore in loans.
Once it acquires the property, Yes Bank will either sell it to a new buyer or when it petitions the National Company Law Tribunal, two officials familiar with the development said, requesting anonymity. .
The property is the first hotel in the county to be launched by Marriott International under its Ritz Carlton brand.
The development comes as a setback for Nitesh Shetty, the founder-chairman and managing director of the Nitesh Group, who was once known as the real estate mogul, but recently his fortunes have turned sour. NEL Holdings not only owes money to banks and creditors, but is also grappling with several cases filed in courts by property buyers for non-completion of projects.
One of the two officials said Yes Bank had earlier sent a notice to NEL Holdings late last year under the Securitization and Reconstruction of Financial Assets and Securities Interest Act, or SARFAESI Act. The notice, sent under section 13(2), allows Yes Bank to take over the hotel for non-payment of dues if the borrower cannot pay the dues within two months. This was after Yes Bank classified loans payable to Nitesh Group as non-performing in 2020.
Emails sent to Nitesh Shetty and Yes Bank spokesperson did not elicit any response.
NEL Holdings, which went public in 2010, had borrowed approx. 300 crores from Yes Bank as its subsidiary, Nitesh Residency Hotels Pvt Ltd. Ltd. built a 281-room hotel in the city’s central business district.
Still, Yes Bank may find it challenging to find a buyer for the property, where the cheapest room prices tend to be 21,000 per night, mainly due to the crushing rental structure.
According to land agreement documents reviewed by Mint, Nitesh Residency Hotel signed a 40-year lease with the church in January 2007, when Nitesh received 2.7 acres of land owned by the Archdiocese of Bangalore.
Nitesh ready to pay monthly rent of residency 39.4 lakh to the archdiocese at the time of the construction of the hotel. after spending 770 million over five years, the Ritz Carlton opened in October 2013. Marriott Hotels earns 0.4% of gross revenue from hotels as its operator. However, both the parties have agreed that the monthly rent will now be 1.29 crores.
Yes Bank is now looking to renegotiate the rental agreement as the rent payable on the property is more than double in the region, as per the officials cited above.
The second executive, on condition of anonymity, said, “Yes Bank is in discussion with Nitesh and Church to resolve the matter, whereby the Church gets a reasonable monthly rent, and the bank can recover its money.” “
The executive clarified, “There will be no impact on the Ritz Carlton as it is the operator of the hotel.”
NEL Holdings holds 20.7 per cent stake in Nitesh Residency Hotels, while Nitesh Shetty holds another 5.3%. Citigroup property investors hold the remaining 74 per cent.
NEL Holdings net income down 20% There was a loss of Rs 281.9 crore in the year ended March 31 65.3 crores. This was after the real estate company announced in 2019 that it would exit the residential housing space. The auditor of NEL Holdings had highlighted the negative net worth of the company and its negative cash flows.
Ray&Ray said, “Defaults in payment of dues to banks and financial institutions and creditors, etc., are identified events, which, individually or collectively, may cast significant doubt on the competence of the company.” Statutory Auditor at Kolkata.
catch all corporate news And updates on Live Mint. download mint news app to receive daily market update & Live business News,