Mumbai-based real estate firm Lodha Developers Ltd (LDL) will raise just under Rs5,000 crore, by sale of its equity interest in its two projects in London for around Rs4,200 crore and the remaining through private equity funding for projects in India.
Lodha’s exit from its under-construction London projects – 1 Grosvenor House and Lincoln Square- would mean that the developer will now solely focus on its domestic projects, which are mainly located in Mumbai Metropolitan Region (MMR).
“…The board of LDL is focussed on ensuring a significant upgrade in its ratings in the next 12 months with a goal of being in the AA category. As a part of this process, LDL is selling its equity interest in the two UK assets for about Rs4,200 crores – this will bring significant cash into LDL and strengthen its balance sheet,” a Lodha spokesperson said.
The UK projects are scheduled for completion in 2019-2020. The projects are funded by lenders and have clocked sales of around GBP 500 million. Lodha UK, the arm that develops these projects, will continue to be the development manager of these projects and finish construction.
On Wednesday, The Economic Times reported that Lodha is close to selling off its two projects in London to an international fund to pare debt.
Lodha’s total debt is around Rs18,000 crore, and in July the company said that it would use around Rs4,500 crore from the proceeds of the initial public offering (IPO) to repay debt.
The developer, which is considered to be the largest in terms of home sales, filed for an IPO earlier this year to raise around Rs5,000 crore, making it the biggest real estate public float since DLF’s Rs9,187 crore IPO in 2009.
Given the unfavourable stock market conditions, Lodha will hit the market only next year now, and may reduce the size of the IPO, two people familiar with the development said.
Shobhit Agarwal, managing director and CEO, Anarock Capital said it’s a brilliant strategic plan B which is well executed.
“…Today the name of the game is to deleverage. Not just Lodha, but including the NBFCs, all have to bring down their debt. If you have something to monetise and reduce debt, it’s the most logical step to do right now. Lodha is not doing a distressed sale (of the London properties). It’s a conscious business call to focus on India,” Agarwal said.
Both Lodha and Indiabulls Real Estate Ltd (IBREL) bought prime properties in UK in 2013-14 in a bid to diversify their portfolios.
IBREL launched its project Hanover Bond—a collection of 80 apartments and a five-star hotel—in March, 2017 and opened bookings for customers.
Lodha clocked around Rs4,200 crore in sales for the April-September period and expects sales to go up by 10% in the current fiscal over the Rs8,150 crore in 2017-18.
Source: Mint