Shriram strikes deal to buy part of AVM land for Rs 400 cr

BANGALORE: Shriram Properties Ltd, a part of the $15 billion diversified Shriram Group, has struck a landmark real estate deal with the family of the legendary film producer A V Meiyappan.
Shriram’s real estate unit has entered into a preliminary agreement with AVM Balasubramanian, one of the five sons of Meiyappan, to pick up economic interest in about 6.5 acres of prime land at Vadapalani in Chennai, which is part of the complex housing India’s oldest surviving film studio AVM.The developer plans to build 700,000 sqft residential projects on the land.
Valued at just under Rs 400 crore, the land parcel represents Balasubramanian’s share of the storied AVM Studio which launched southern silver screen icons Shivaji Ganesan, Vyjayanthimala and Kamal Haasan among others. AVM teamed up with some of the most successful film makers like SP Muthuraman to roll out several blockbusters in its portfolio of 170 films.
The 2007 Rajinikanth starrer and runaway hit Sivaji was at that time regarded as the most expensive Indian film to be made at an expense of Rs 100 crore.
Sources citied earlier said that the deal would be structured in two parts, where Shriram Properties will buy half of Balasubramanian’s land for about Rs 180 crore and jointly develop the remaining half with him.
A term-sheet (or a preliminary deal) giving Shriram either ownership or mortgage rights over the land has been signed, but a final closure and fund transfer would happen only approvals fall in place, sources added.
Shriram Properties declined to comment on the story. Repeated efforts to reach out to Balasubramanian didn’t elicit a response, with his manager saying he was “out-of-station”.
This would be the first big land deal being executed by Shriram Properties after Tata Capital bought a significant minority stake in the company for Rs 470 crore two weeks ago. However, Shriram, which has a robust record in attracting financial investors, is expected to rope in a partner to finance the AVM project as well.
The last two big land transactions in Chennai --- the 1.5-acre Tata Communications land parcel for Rs 200 crore and the 10.16 acre Hindustan Teleprinters land parcel for Rs 272 crore--- were both bagged by Chennai-based VGN Developers.