Housing Development and Infrastructure Ltd (HDIL), a Mumbai-based property developer, has rolled over Rs 2,500 crore debt it has taken from commercial banks for the next 15-18 months, a top company official has said. The company has rolled over the debt taken from public sector banks such as Bank of India, Union Bank of India, Punjab National Bank, Uco Bank, among others. The restructured debt was due in the next couple of months.

HDIL has around Rs 4,000 crore debt on its books. It borrowed Rs 3,000 crore in the first half of this year, mainly for its airport rehabilitation project in Mumbai. The rate of interest had remained the same even after the restructuring, the official claimed. “Our rate of interest has not gone up after restructuring. Most of our lenders are nationalised banks and our borrowing rates are linked to prime lending rates. Except for the restructured amount of Rs 15-20 crore per month, we do not have any significant payment in the next 15 months,” said Hari Pande, deputy general manager, finance, HDIL.

The company was borrowing funds at 13.25 per cent, he said. “Only during the second quarter were our rates at 15.5 per cent, due to inflation and tight liquidity,” he added. Banking on boom in the property sector, realty developers, including DLF, Unitech, Parsvnath, HDIL and others, borrowed heavily to fund their projects in the past two years, which increased their debt levels sharply. Most property companies have a debt-to-equity levels of 0.80 to 1.5, above the normal level of 0.5. “Debt levels are a cause for concern with all real estate companies in the country. Even if they roll over, the debt needs to be paid later,” said an analyst from CLSA.

Almost all real estate developers have used the recent lifeline allowed by the Reserve Bank of India to restructure their loans as they are hit by slowing home sales and mounting debt. In February, DLF, the country’s largest realty company, refinanced about Rs 2,000 crore loan at a 12-13 per cent interest rate out of the Rs 4,300 crore it needed to repay by June this year. The company plans to raise the remaining Rs 2,300 crore from selling bonds, discounting lease rentals and selling stake to private equity investors. The company recently raised Rs 720 crore from selling bonds to Life Insurance Corporation of India as part of its plan to raise Rs 5,000 crore from such sales.

Another property major, Unitech, has restructured Rs 1,000 crore of debt with public sector banks and rolled over Rs 500 crore it has borrowed from mutual funds for three months. Unitech is carrying a debt of around Rs 8,350 crore on its books against a market capitalisation of Rs 5,050 crore. It has already restructured loans worth Rs 1,000 crore from public sector banks. Even developers such as Omaxe, Puravankara and Sobha Developers are in talks with banks and financial institutions to restructure their loans. But analysts say restructuring will only solve short-term worries of realtors. “Realty companies are either rolling over their loans or refinancing to pay their existing loans, which is increasing their debt levels. Today, their debt levels are the same as in March 2008,” said an analyst with rating firm who did not wish to be quoted. Rating firms are also downgrading the debt of real estate companies due to falling sales and declining profitability.

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