Net debt levels of listed real estate developers drop 37% amid COVID: report

The net debt of listed real estate developers has fallen by 37% since the first wave of Covid-19.

A report by ICICI Securities noted that lower debt levels were achieved through a combination of reducing the cost of debt by 80 to 160 basis points (bps), reducing corporate overhead 20-40% from pre-Covid levels, operating excess cash, asset sales and equity raise either through the QIP route or through dilution at the SPV level.

“On an aggregate basis, listed developers in our coverage universe (ex-REIT) were able to reduce their consolidated net debt level by 37% to Rs 274 billion (ex-DCCDL) between Q4FY20-Q1FY22 (March 20 to June 21),” he said.

As the entire real estate sector in India, especially the unlisted space, continues to face high cost and debt burden, listed developers’ balance sheets have thinned, putting them in a vulnerable position. strength to invest in medium-term growth and is likely to accelerate the pace of industry consolidation.

The report notes that the developers used a mix of organic and inorganic ways to reduce debt.

The report notes that listed developers will invest in growth once the impact of Covid fades. In line with the stated intention of the majority of developers in our universe of coverage, although they have protected their balance sheets during the difficult period affected by Covid, they will resume investing in new plots of land wisely to grow their business. over the next three years. four years old, he said.

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Posted: Friday, August 20, 2021, 4:41 PM IST

Ann J. Cox