India’s realty business giant, Lodha Developers will move out of the UK property market and is on its way to sell two of its residential projects in the central London for about Rs 42 billion (£465.80 million), according to a company official on Wednesday (28).
The decision to exit from UK’s real estate market is a part of the company’s strategy to cut debt and further strengthen its business.
Lodha Developers is planning to launch IPO when market conditions get strengthen and aims to raise about Rs seven billion by selling a share in a middle-level income real estate project in India’s commercial capital Mumbai to private equity players taking the total fundraising to around Rs 50bn.
The real estate giant entered into the London market in 2013 with the takeover of the landmark MacDonald House in central London from the Canadian government for more than Rs 31bn.
Later the Mumbai-based real estate group acquired another site in prime Central London for £90m in 2014.
As far as the company’s present strategy is concerned, the fund obtained by the firm after the deal with a British investment fund would be used to repay the debt which is currently around Rs 180bn. The real estate developer is aimed at ensuring a significant upgrade in its rating in the next one year with an objective of being in the AA category.
The real estate giant expects that it would be earning 15-16 per cent return on investment in the UK market. Lodha’s first UK project Lincoln Square launched in 2016 has achieved a sales booking of £170m. In 2017, the company started its second project ‘No1 Grosvenor Square’, located in the heart of Mayfair.
The Lincoln Square project has 221 housing units, the housing project at Grosvenor Square has 39 apartments and five duplexes with starting price of £7.5m. The two projects are expected to complete in 2019. The UK projects are completely funded by the lenders and have recorded good sales.
Lodha UK will continue to work as the development manager of the projects being finished.
Meanwhile in India, the real estate giant has achieved sales bookings of Rs 42bn in the first half of the financial year 2018-19. The company witnessed good sales in the last two months also.
Lodha group is also developing rental properties worth Rs 100bn and of which 25 per cent is finished. Its yearly rental expected to be at Rs 1.75bn by the end of current fiscal year.
The company has received approval in July to reach the capital market with an initial public offer of about Rs 55bn. If successful, the sale of share would be the second biggest IPO in the real estate business after DLF which raised close to Rs 92bn in 2007.
Lodha Developers recorded a 32 per cent increase in its consolidated net profit at Rs 7.9bn during 2017-18 from Rs 5.99bn in the previous financial year.
The total income of the firm climbed by 22 per cent to Rs 97bn in 2017-18 from Rs 79.57bn in the previous year.