Did Carnival Group just buy a gem from L&T Realty?

Carnival Group, promoted by Shrikant Bhasi, has scooped up the ELANTE PROJECT in Chandigarh for INR 1,785 crore. With a rental income of INR 170 crore in FY 2014-15, ELANTE already presents a lucrative gross yield of 9.5% to Carnival Group. However, L&T Realty ((an L&T subsidiary), the selling entity, just about made meager gains on its eight year old investment.

ELANTE, a mixed use development project occupying a 20 acre (81,340 sq m) plot area in Chandigarh, hosts one of the most successful malls - ELANTE MALL - in Northern India. As per an ICRA report, ELANTE MALL enjoys an astonishing 100% occupancy.

Promoted by CSJ Infrastructure (an L&T subsidiary), ELANTE MALL has a retail space of 1.15 million sq ft and houses an 8-screen Multiplex of PVR Cinemas, which opened in June 2013. ELANTE PROJECT also includes office premises with a central courtyard, and an upcoming 5-star hotel. The office complex covers 400,000 sq ft of space (a large part of which has been sold), while the hotel occupies 250,000 sq ft area.

Background: In 2007, CSJ Infrastructure acquired a 20-acre plot from Pfizer for INR 278 crore. In addition, it incurred a land use conversion charge of INR 185 crore since the company wished to build a commercial project on an industrial land. CSJ Infrastructure planned for a mixed use development project over the land for an estimated project cost of INR 1,127 crore. It commenced construction of ELANTE PROJECT in Dec 2009. The ELANTE MALL (which includes the Multiplex) and office complex were completed in March 2013. The 213-room Hyatt Hotel is expected to open in December 2015.