Troubled Air India to Monetize its Real Estate Assets

Air India plans to monetize its real estate properties to overcome its present financial crises. Air India hopes to raise sufficient fund by monetizing its properties or real estate assets.

Air India is all set to raise the fund required for overcoming the current financial crises. The National Carriers have already instructed DTZ International Property Advisers Private Limited, the real estate consultant of Delhi.

Air India plans for a multiple handling over the real estate properties. Selling, leasing and redeveloping are some of the options Air India has at hand.

Selling or leasing of the properties will enable Air India to meet the conditions put forward by the government. Earlier the government had demanded Rs.30000 Cr as security. This amount included an upfront equity infusion of Rs.6750 Cr and assured equity support of Rs.23481 Cr until 2020-21.

Air India hopes to raise an amount of at least Rs.500 Cr in this current year. The airline hopes to raise another Rs.5000 Cr within next ten years. These funds are expected to be raised from monetizing some of its real estate properties.

Air India has nearly 105 properties. Among these properties 3 are abroad. Among the properties to be monetized are its office and reservations building at the airport in New Delhi. Airline’s staff housing at Vasant Vihar also is to be monetized.

Besides the New Delhi Properties, staff housing buildings of Mumbai and Chennai are also to be monetized. It is also said that the airlines overseas properties in London and Tokyo also to be monetized.

Four real estate consults – Cushman and Wakefield India, DTZ International Property Advisors, Jones Lang LaSalle and Colliers International – have been shortlisted buy the airlines.

Air India’s debt is estimated to reach around Rs.43777 Cr. This is estimated on 31 December. The airline said to have a loss of Rs.27000 Cr in the last five years.

Jones Lang LaSalle India’s 2011 report had pointed that the airline owns leasehold rights of some real estate properties.  The report pointed to the Air India’s building along the Marine Drive. This building is prominent as it is strategically located in a prime area.

G + 22 storied Nariman Point building has nearly 220,000 sq. ft. to be leased. An amount of up to Rs. 80 Cr can be gained by leasing this building. If it is sold for its capital value, then Air can gain nearly Rs. 800-crores, the report added.

Through NCDs Placement to LIC (Rs. 3000-Crores) and EPFO (Rs. 4400-Crores), Air India had raised Rs. 7400-Crores. This fund was mainly used to repay a part of their loans taken from nearly 19 banks. Earlier the airlines had taken Rs. 7,391.67-Crores as short -term working capital loans.

With tenure of 19 years, the NCDs were granted in the beginning of this November.  Air India has to pay off principal amount of NCDs in five installments. The Airline has to pay the interest biannually.

2 thoughts on “Troubled Air India to Monetize its Real Estate Assets

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