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Indiabulls Housing to make investors presentation on developer loans to allay concerns

A company official said it is regarding concerns stemming from its exposure to Supertech Group, whose credit ratings have been downgraded to default.

October 19, 2018 / 10:49 PM IST
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Indiabulls Housing Finance said the company will make a detailed presentation on top 25 developer loans to its debt investors (mutual funds and insurance firms), following recent rumours regarding the lending to developers.

"To assuage any concerns that may have arisen due to rumours, the company is taking a proactive step for making a detailed presentation to its debt investors (mutual fund and insurance companies) of the top 25 developer loans of Indiabulls Housing Finance, the other lenders to these developers, the LTV (loan to value) and details of the security package including LRD assets and residential units mortgaged with Indiabulls Housing Finance for each of these loans," it said in a regulatory filing.

When contacted what are the specific rumours, a company official said it is regarding concerns stemming from its exposure to Supertech Group, whose credit ratings have been downgraded to default.

"Further, we wish to highlight that average LTV of the top 25 Developer Loans is 43 percent and all top 25 Developer Loans are standard," the company said in the filing.

In a separate filing, the company said: "This is in reference to some media coverage on developer loans of Housing Finance Companies. We would like to highlight...The portfolio comprises of leading developers only in the metro cities of the National Capital Region [NCR], Mumbai Metropolitan Region [MMR], Chennai, Bangalore, Pune and Hyderabad".

Every developer in the portfolio has multiple lending relationships with leading banks, private equity partners and financial institutions. Not a single developer in our portfolio has had Indiabulls Housing Finance Ltd as its sole lender, it added.

The company also said that majority of the portfolio is backed by lease rental discounting assets with leading multinational companies and Indian corporates as the tenants of the building.

"Such leased rental assets are cross-collateralised with construction-linked loans of the developers. The average Loan-to-Value [LTV] in the developer portfolio is 43 percent. The collateral of leased buildings, ready apartments and under-construction apartments are mortgaged with Indiabulls Housing Finance Ltd on exclusive basis," the firm said.

The housing financier added that it does not give any loans on charge with any other lenders and originates these loans directly.

Neither does the company buy developer loans from other lenders nor does it sell its developer loans to other lenders, it added.

"Every loan in the developer portfolio has dedicated escrow accounts with exclusive charge of Indiabulls Housing Finance into which cash flows are directly deposited by either tenants occupying the buildings, or home buyers in the construction-linked loans.

"The developer has no control whatsoever on the cash flows being received in the escrow account with Indiabulls Housing Finance directly from the tenants of the building or from the home buyers in an under-construction project till such time the Indiabulls Housing Finance's loan is paid back in full," it added.

It is to be noted that the housing finance market is already under stress post the IL&FS crisis.

Stock of the company slumped over 17 percent to close at Rs 654.25 on BSE.

first published: Oct 19, 2018 10:35 pm