Indiabulls exits three realty projects of investee firms

"MUMBAI: Mortgage lender Indiabulls Housing Finance has exited three realty projects of its investee companies across Mumbai, the National Capital Region (NCR) and Hyderabad, worth nearly Rs 450 crore, said two persons with direct knowledge of the development.

In the largest of these three transactions, realty developer M3M has repaid Rs 225 crore to the lender after raising funds from the State Bank of India for its residential development project M3M Golf Estate in Gurgaon. The project is spread over 56 acres and includes an executive golf course.

Mumbai-based realty developer Mohan Group has also repaid Rs 110 crore to the housing finance company. The developer raised the funds from Axis Bank for two residential development projects - Mohan Nano Estates in Ambernath and Mohan Altezza in Kalyan.

Both the projects put together have nearly 1,900 flats with 1.3 million sq ft space. The projects have achieved 80% completion and have received Occupation Certificate (OC) for completed towers.

Hyderabad-based GSM Mega Infrastructure raised Rs 102 crore from Karnataka Bank against its premium retail property GSM Mall. The operational retail project at Hyderabad’s Kukatpally has total 4.40 lakh sq ft of leasable space and is completely leased out to key anchor tenants like INOX, Central, Reliance Trends and Pantaloons. The funds raised through this exercise have been utilised to repay dues of Indiabulls Housing Finance.

Last month, Noida-based real estate developer Logix Group raised Rs 540 crore from IndusInd Bank through a lease rental discounting (LRD) transaction on two of its commercial office space projects. The funds raised through this exercise were also to be utilised to provide an exit to Indiabulls Housing Finance.

Over the last few months, Indiabulls Housing Finance has exited from several of its large loans for projects such as One BKC in Mumbai, Vatika Mindscapes in New Delhi, RMZ Centennial and Nxt in Bengaluru, and Chennai’s Ozone TechnoPark.

M3M confirmed the debt repayment to Indiabulls Housing Finance stating that the new funds have been raised at around 11%, while the earlier loan was at 14% interest rate. “With this, we have repaid total 60% of Indiabulls' loan to M3M. We will soon be providing them complete exit aided by sales proceeds as sales from delivered projects is good,” said Pankaj Bansal, director, M3M Group.

ET’s separate email queries to State Bank of India, Axis Bank, Karnataka Bank, Mohan Group, GSM Mega Infrastructure and Indiabulls Housing remained unanswered till time of going to press.

Late in December, CCI Projects sold its 8.8-acre parcel, part of total 22 acre plot, close to the Sanjay Gandhi National Park in Mumbai's Borivali suburb to DMart founder Radhakishan Damani for over Rs 500 crore. The associate company of Cable Corporation of India will use funds from this sale to pay the Rs 360 crore it owes to Indiabulls Housing Finance. The funds remaining after payment to Indiabulls Housing Finance will be used to complete the proposed project.

Since the onset of the liquidity squeeze for the financial sector following default by non-bank infrastructure financier IL&FS in September 2018, real estate developers’ ability to raise finance has been impacted.

The non-banking finance companies and housing finance companies which used to drive the real estate sector’s funding transactions have since shied away from the sector.

However, for a few banks and other financiers, this has turned out to be an opportunity to cherry-pick loans with robust collateral and demonstrated cash flows or sales velocity, and which offer attractive reward for risk.

Large banks have recognised an opportunity to capitalise on a slow real estate market, whilst simultaneously also giving the sector a much needed boost. The country’s largest lender, State Bank of India, has for instance introduced a new “Residential Builder Finance with Buyer Guarantee Scheme”.

Other banks too are looking to refinance quality projects or offer attractive schemes for prospective home buyers.

In addition to a boost in residential sales, such schemes will also instil greater confidence in home buyers.

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