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Standard Chartered Bank has initiated the process of offloading loans it extended to the defaulting real estate developer, Radius Sumers Developers. This developer is currently working on a lavish residential project called 'Harbour Heights,' situated on a 10-acre plot in South Mumbai's P D'mello Road in Mazagon. This project is set to feature four high-rise residential towers and a mall, catering to the high-end luxury segment of the real estate market.
The bank, in a move to manage its exposure and potential losses, has now sought to sell off its debt, which stands at a substantial Rs 569 crore. This amount includes a principal loan of Rs305 crore and an additional Rs 264 crore in interest charges. To facilitate the sale, Standard Chartered Bank has set a reserve price of Rs 230 crore, thereby inviting asset reconstruction companies (ARCs) to participate in the bidding process. The bank has announced a deadline for expressions of interest from ARCs, which is scheduled for November 6.
The venture, 'Harbour Heights,' is being undertaken by Radius Sumers Developers, a special-purpose vehicle (SPV) that was jointly established by Sanjay Chabaria, representing the Radius Group, and Sumer Buildcorp. The entire project is estimated to incur costs amounting to Rs1,683 crore, with funding derived from term loans of Rs600 crore, a promoter's contribution of Rs368 crore, and advances from customers totalling Rs715 crore, as detailed in a rating report published by Brickworks on December 2, 2022.
Up until April 2019, the project had already absorbed Rs1,057 crore, including expenses related to land acquisition and development. However, the project has been plagued by delays and has not progressed according to its initial timeline. With a saleable area encompassing approximately 1 million square feet, it was originally projected to be completed by December 2025.
The financial troubles facing Radius Sumers Developers are further compounded by loan defaults. Specifically, the company has defaulted on loans amounting to Rs600 crore, of which Rs325 crore is owed to Standard Chartered Bank and Rs275 crore to PNB Housing Finance. These defaults have prompted Standard Chartered Bank to initiate proceedings to admit the real estate developer to corporate insolvency. This is currently under consideration by the Mumbai National Company Law Tribunal (NCLT).
In a recent hearing held on September 13, legal representatives from both Radius and Standard Chartered Bank informed the tribunal that they were actively negotiating a settlement and requested additional time to finalize the agreement. However, the NCLT has yet to provide an update regarding the details of the next hearing on its website.
In the preceding hearing on August 8, Radius had also requested additional time for settlement discussions and had even offered their own house as collateral to provide assurance to the Standard Chartered Bank, indicating the seriousness of their intent to resolve the financial disputes amicably.
This development underscores the challenges faced by the real estate sector in India, where delays, financial stress, and loan defaults are not uncommon, impacting both developers, lenders and homebuyers. The fate of the 'Harbour Heights' project and Radius Sumers Developers will depend on the outcome of the ongoing negotiations and the decision of the Mumbai NCLT.
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