MUMBAI: One of India’s largest realtors and probably the most aggressive one, Lodha Developers, is selling its London assets to prune borrowings.
The Mumbai-based realty company is close to completing the formalities to sell its two residential projects in London — Lincoln Square on Carey Street and 1 Grosvenor Square in Mayfair — to an international fund.
The transaction is expected to fetch about Rs 4,200 crore, depending on the foreign exchange rate, said a person familiar with the talks.
The buyer is believed to be a London-based real estate fund.
“It would help the company lower leverage. Also, the offer is believed to be good. It would generate an internal return of around 18%,” said another person.
The pound sterling has depreciated against the rupee, falling to 90.2 from over 100 in November 2013 when Lodhas first invested in London.
As on December 31, 2017, net debt of the unlisted Lodha Developers was around Rs 14,000 crore, three times its net worth (Rs 4,660 crore), as per the draft red herring prospectus filed by the company. Its revenues for nine months ended December 2017 stood at Rs 6,600 crore and operating profit was Rs 1,300 crore. The company had an inventory book of Rs 23,500 crore.
The company had to defer its listing, through which it hoped to mobilise Rs 5,000 crore, due to weak market conditions.
Earlier, the management had said it was expecting home sales of £1.5 billion, or Rs 12,000 crore, from its London business. As of December 31, 2017, 114 units were sold for £277.65 million.
INDIABULLS HFC-DEUTSCHE DEAL
Indiabulls Housing Finance Company has offloaded large parts of its outstanding in four loans to Deutsche Bank in a string of transactions that helped the company raise Rs 4,000 crore.
All the four loans are against prime properties such as malls in the Delhi-NCR region and Bengaluru, and rent-generating commercial asset at Bandra-Kurla Complex in Mumbai.
The company is expected to close three more big loan securitisation deals with a few private and foreign banks by early December. “These are not loan sales or refinance. These are direct assignment deals, where Indiabulls retains a slice of the loan on which it earns full interest while receiving the difference between the interest borrowers pay and the rate that it paid to Deutsche. Such transactions would lower leverage and release some capital for the company without sacrificing future earnings,” said an industry source.
Indiabulls Housing has a balance sheet of Rs 1.4 lakh crore, with Rs 20,000 crore of cash.
A week ago, Indiabulls had announced that it had raised Rs 23,700 crore since the financial markets (and NBFCs, in particular) came under stress. Of this, Rs 8,000 crore was through securitisation — Rs 4,000 crore of retail loans and the balance comprising large loan assets.