Brexit makes Indian realty firm Lodha's plan to sell UK assets uncertain

Mumbai’s real estate firm Lodha Developers is planning to sell assets in London at a time when realty sector outlook has become uncertain because of fear of a hard exit of the United Kingdom from the European Union.

With high debt on its balance sheet, Lodha plans to sell assets worth Rs 42 billion in London to repay loans taken from NBFCs in India, Indiabulls has decided to stay put till clarity over Brexit emerges. Its sale of assets was fast forwarded as planned initial public offering of shares was deferred, say banking sources. "The Brexit has made things difficult for the real estate sector there. Till March next year, outlook will remain uncertain," said a real estate analyst.

According to a Lodha official, the company owns substantial stake in two real estate developments in London, 1 Grosvenor Square and Lincoln Square, and is selling both assets for Rs 42 billion to bring cash into its flagship company and strengthen its balance sheet.  “Besides, Lodha has also entered into other private equity transactions for projects in India, which will raise around Rs 50 billion,” said a company spokesperson. 

The asset sales come at a time when the overseas bonds of Lodha Developers fell by 18.8 per cent year to date, as per Bloomberg data. On this, Lodha officials said the company had raised $325 million, which was not traded on an exchange (over-the-counter trading).  Over the past three months, value of bonds issued by emerging market companies have fallen because of global macro factors.