Fis Eye Mnc Realty For Mortgage Loans

Institutional players in the property market, including Housing Development Finance Company (HDFC), ICICI Housing Finance and Standard Chartered Bank, are offering to buy properties owned by multinational companies (MNCs) and lease the same back to them.

Further, the institutions are also participating in many property projects where they are assured of lease income.

HDFC and ICICI have invested in Bangalore's Hitech city, which was built by Larsen & Toubro. Much of the premises have already been leased out and to well-known infotech players. ICICI has in partnership with the Andhra Pradesh government set up a Knowledge Park for business-driven research in Hyderabad.

 

A senior official at a housing finance company said: "We are looking at MNCs only where rentals are assured for at least three years". This is the minimum lock-in period in a leasing agreement for many of the institutions, currently flushed with funds but looking at safe avenues for investment.

The proposition works out to be a win-win situation for both parties concerned. Some multinationals operating in India having taken a conscientious decision to unlock their capital and sell their commercial properties to institutions and banks and then lease them back. The Dabhol saga is one of primary reasons for MNCs to take this view. This follows Enron's inability to sell its premises at Bandra-Kurla Complex, Mumbai, and thus being forced to lease out a couple of floors to Citibank in the meantime.

Property prices are not expected to appreciated and in some cases have depreciated since the MNCs bought the space, as in the case of Enron, said a senior official associated with the proposed sale of Enron's premises at Bandra-Kurla.

Some MNCs have, of late, gone in for a valuation of their properties with a view to sell and lease back the same. This would give them additional funds to run their core business, said the official. Sources stated that Motorola sold off its premises in Bandra-Kurla and is reviewing its Delhi plant. Hughes has also gone in for leasing its plant in Delhi.

"Global business is also changing so fast that decisions can be taken to close down operations and exit the country. Only leasing property gives us that kind of flexibility to do business in India," said an official from an American IT firm.

Many telecom companies bought a lot of land for office space. Today some of them are liquidating their wealth of property and choosing instead to lease the same.

"The changing market scenario as more players are entering each circle is forcing companies to review their operations and business plans in terms of expansion," said the official.