After failing to get any suitable tenant or buyer for its erstwhile India headquarters

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Hindustan Unilever (HUL) the country’s biggest consumer staples firm is having a second go at trying to lease its iconic property in the commercial hub of South Mumbai.

HUL moved its corporate office to a new campus in Andheri (E), Mumbai in Jan 2010, from its existing office at Backbay Reclamation, Mumbai, the landmark Lever House, where it was housed for over 46 years.

The Indian arm of Anglo-Dutch MNC Unilever had given the mandate of selling or leasing its Backbay Reclamation property to Jones Lang LaSalle Meghraj (JLLM) who was however unable to find a buyer/lessee at a price acceptable to the company that counts two of every three Indians as its customers. The company now plans to lease out the building on its own, to a single tenant who will have an option to purchase the premises after a period of three years.

The company is understood to have mandated Jones Lang LaSalle Meghraj (JLLM) to handle the Backbay deal in the year 2009. “The contract expired around October 2011,” said Anuj Puri, country head at JLLM. The company had made several changes such as giving the building a modern façade incorporating suggestions from JLLM perhaps India’s largest real estate consultancy firms. “We have refurbished and renovated the building in the year 2009 and slowly started focusing on lessees in 2010.We are looking at broader options for the Backbay property,” R Sridhar, chief financial officer (CFO) at HUL told Financial Chronicle.

When contacted by email, the HUL spokesperson said, “We are exploring various options for realizing optimal business value from the property. We do not have any further comments to offer at this stage.” The purchase option being granted to the lessee is expected to make the deal attractive especially if the tenant is spending large sums of customizing the interiors as per their requirements, said experts. The company started the process of renting or selling the 1,53,000-square feet HUL House almost two years ago. However, it could not conclude any deal due to valuation issues. HUL had offered the ground-plus-seven-floor property on leave and licence or lease on a ‘warm shell’ basis (which means the property has minimal interiors done) for five to nine years, JLLM had said in a newspaper advertisement on behalf of HUL. “The contract expired last year, not withdrawn,” said Sanjay Dutt, chief executive at JLLM, an international property consultancy firm.

HUL could earn anywhere between Rs 37.8-57.75 crore by renting out the property, according to a Mumbai-based property consultant. “The firm is asking for a lease rent of Rs 275 per square foot,” said property consultant.

The company’s original plan to sell off the property, which could have fetched around Rs 500 crore, was part of its move to cut costs, unlock value from its real estate assets and invest it in the core business. Considering that the locus of business has been shifting northward into central and suburban Mumbai, realty experts state that a prospective tenant will be someone like a MNC entering the country who attaches a premium to being in the island city.