Moody's lowers Macrotech Developers' rating again, this time to Caa1

The earlier B3 rating was itself a downgrade, by Moody's this August, and indicating hightened credit risk.

Global rating firm Moody's Investors Service has downgraded the corporate family rating (CFR) of Macrotech Developers (earlier known as Lodha) to Caa1, from B3. A rating of Caa1 is given to entities with high credit risk.

The earlier B3 rating was itself a downgrade, by Moody's this August, and indicating hightened credit risk. On Tuesday, Moody's also downgraded the backed senior unsecured rating of the dollar-denominated bonds issued by Lodha Developers International and guaranteed by Macrotech, to Caa1 from B3.

"The downgrade to Caa1 reflects continued uncertainty with respect to the refinancing of Macrotech's upcoming debt maturities," says Sweta Patodia, a Moody's analyst. "While the company has made some progress in its refinancing efforts, its measures to date do not completely alleviate the significant refinancing risks." She is also Moody's lead analyst for Macrotech. MDL now has in place an executed loan agreement for $155 million, secured against the unsold inventory at Lincoln Square, one of its London projects. However, drawdowns under this facility remain subject to receiving the practical completion certificate for all units at the property, expected by next month.

The management estimates that practical completion certificates have come for about 75 per cent of the units in the development, Moody's said.

Macrotech expects to secure another credit facility of around $195 mn against the unsold inventory at Grosvenor Square, its second London project. Documentation for this facility is in progress and likely to be completed over the next few weeks, it said. "These two facilities constitute the company's primary source to refinance the upcoming bonds. However, given that the facilities cannot be drawn down immediately, and remain subject to the fulfilment of certain conditions, liquidity risk remains elevated," says Moody's.

In addition, the company plans to set up a rupee-denominated facility, to be secured against the inventory at its Indian operations.

Business Standard

Realty firms may raise over $25 bn in 3 years via REITs: Anarock report

Earlier this year, global investment firm Blackstone and realty firm Embassy group launched India's first REIT to raise Rs 4,750 crore.

Real estate developers may raise more than $25 billion over the next three years by listing their rent-yielding commercial properties through the Real Estate Investment Trusts (REITs) route, according to realty consultant Anarock.

Earlier this year, global investment firm Blackstone and realty firm Embassy group launched India's first REIT to raise Rs 4,750 crore. Their joint venture firm Embassy Office Parks listed its rental assets on the exchanges.

"Commercial REITs may raise over $25 billion for Indian real estate over the next three years. This involves the listing of more than 150 million sq ft of rent-yielding Grade A office properties across top seven cities - covering 25-30 per cent of the overall Grade A office space in these cities," said Shobhit Agarwal, MD & CEO Anarock Capital.

Currently, the top seven cities -- Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad and Pune -- have close to 550 million sq ft Grade A office supply - of which 310-320 million sq ft is 'REITable' as of now, he added.

"The recent success of India's first listed REIT offers much-needed hope to the beleaguered real estate sector. The enthusiastic response to Embassy Office Parks' REIT launch - and its more-than-satisfactory performance - is priming investors for similar REIT opportunities, which in turn will open up more funding avenues for the sector," Agarwal said.

Several large developers are keen to list their commercial assets, he added.

According to Anarock, Prestige Group is planning to list its first commercial REIT very soon and has already started segregating its residential, office, retail and hospitality businesses. It may also launch a retail REIT as and when the opportunity arises.

Other players in the REIT fray are RMZ Corp, K Raheja Corp, Godrej Properties and Panchshil Realty.

"REITs would help commercial developers improve their liquidity by unlocking the value of their assets to raise capital. For big and small investors, it is a highly de-risked investment route offering annual returns of as much as 12-14 per cent over the long-term - an attractive proposition when viewed against more volatile asset classes," Agarwal said.

Business Standard

Tax saving tips: Invest in real estate and save tax on LTCG

Taxpayers can save the taxes on the gains by availing the benefit of tax exemptions allowed under the Indian tax laws.

Investments in real estate are borne out of savings made out several years of earnings. These investments have both monetary value and emotional value for investors. 

Individuals buy and sell real estate to reinvest in upcoming real estate projects, to meet growing family needs, to move to another location of choice etc. Since real estate investment involves a large amount of money, the sale of property results in large gains. Tax may have to be paid on these gains unless they have been invested. Let’s find out how to save tax on sale of a property.

Taxpayers can save the taxes on the gains by availing the benefit of tax exemptions allowed under the Indian tax laws. The law allows a taxpayer to invest in real estate and avail the benefit of exemptions on taxable gains realised on the sale of assets or real estate.

A.Tax saving exemptions:

I.Investment in real estate upon exit from a real estate property

Individuals who have earned gains upon exit of a residential house and wish to reinvest in another residential house can avail of an exemption from taxation of the capital gains.

For example:

Mr A sells his residential house on 5th April 2018 for Rs 50,00,000. Mr A had bought the house for Rs 20,00,000 on 25th March 2013. With the proceeds of the house, Mr A purchases a new residential house for Rs 60,00,000.

To claim this exemption the property which is sold should have held by a taxpayer for more than 2 years.

The above exemption is now extended w.e.f 1 April 2019 to investment in 2 residential properties (once in a lifetime benefit), the one condition being that the gains are not above 2 crore rupees.

II.Investment in real estate upon the sale of any other asset

Individuals who have earned gains upon sale of any other asset and desire to invest in a residential house can avail an exemption from taxation of the capital gains. Other assets would include land, gold etc.

Business Standard

Singapore home prices fall most since 2016, luxury hardest hit

The private residential property index dropped 0.6% from 2018's last quarter, preliminary data from the Urban Redevelopment Authority showed on Monday.

Singapore’s private residential prices fell the most in two-and-a-half years in the first quarter, with values of high-end homes have the biggest decline in a decade, following last year’s surprise tightening of property market curbs.

The private residential property index dropped 0.6 per cent from 2018’s last quarter, preliminary data from the Urban Redevelopment Authority showed on Monday.

It was a second consecutive fall after a 0.1 decrease in October-December.

Monday’s data showed that prices in Singapore’s prime districts fell 2.9 per cent - the biggest fall since the second quarter of 2009, according to consultancy Cushman and Wakefield. Prime districts include luxury homes in the Orchard Road shopping area and Sentosa, an island resort.

“Multiple dosage of cooling measures coupled with stronger headwinds in the macroeconomic condition has started to weigh down buying demand,” said Christine Li, Singapore head of research for the consultancy.

Li forecast overall prices to be flat this year.

To counter what they said was “excessive exuberance” in the city-state’s property market after a spike in prices last year, authorities in July slapped higher stamp duties on property purchases for individual home buyers and tightened housing loan limits.

They also unveiled stricter guidelines on the maximum number of units in new blocks of private flats and condominiums to tackle the development of so-called “shoebox units”.

Business Standard