In the last couple of years, businesses all over have witnessed unprecedented pressure to manage cash flows and financial commitments. This has forced key decision-makers to evaluate alternative sources to raise funds.

Monetisation of real estate assets

One innovative way to raise funds is monetisation of real estate assets. It is a great way to provide growth capital for the business or redeploy the stuck capital into higher return opportunities or pay off debt. It can be done through certain types of transitions such as non-recourse financing, sale-leaseback transactions, Real Estate Investment Trust (REIT) conversions and spin-offs.

Depending on the business requirements, a suitable plan needs to be devised. For example, if the business requires continuous use of the real estate, sale and leaseback model could be suitable. Likewise, if real estate is not likely to be used in the business, sale of assets method could be suitable. Similarly, monetisation methods such as REIT conversions may be ideal for businesses that do not require immediate finance to fund their working capital needs.

Benefits of monetisation of real estate assets

Monetisation of real estate assets offers numerous advantages to corporates. These include:

• Access favourable long-term financing
• Improve financial performance
• Unlock capital for growth and operations
• Raise capital via non-traditional sources
• Transfer obsolescence and residual risks of ownership
• Maintain control of the property for as long as needed

Challenges in monetisation of real estate assets

Monetising a real estate asset could entail multiple regulatory and tax implications. Therefore, you need to carefully plan the path of real estate assets monetisation. It involves crucial analysis by businesses such as accessing permissibility of sale, getting approvals from tax and regulatory authorities and meeting compliance with FDI conditions in case of foreign investment.

Furthermore, an analysis needs to be done on the acquisition of land, sources of funding, security created against the real estate, seeking approvals from shareholders and creditors, etc.

Often this becomes a costly, daunting and time-consuming affair. Another important aspect in monetisation of real estate assets is tax consideration which needs expert intervention and careful planning.

What can we do?

Whether you are dealing with a single asset or a large portfolio, our experts can advise you on monetising your real estate assets and derive maximum benefits from it. We can advise you on the best and most effective strategies for monetising your real estate.