HDFC looks at promoter offer for two Radisson Blu hotels

HDFC, which has merged with HDFC Bank on July 1, is currently evaluating a one-time settlement
(OTS) offer from promoter DP Jain regarding the sale of two Radisson Blu hotels in Ghaziabad, on the
outskirts of New Delhi.The lender has received an offer of 315 crore from the promoter, while Prudent
ARC has submitted a binding offer of 311 crore.
The total outstanding loan for the hotel properties amounts to 507 crore. The portfolio consists of loans
provided to KAD Housing and KAJ Infrastructure, both entities promoted by DP Jain and his family that
operate two five-star hotels in Ghaziabad, namely Radisson Blu Kaushambi and Radisson Blu Hotel, as
reported by ET on June 23. According to a source, the loan was categorized as a special mention account
(SMA) 2 as of June. SMA 2 means the loan is overdue between 61 and 90 days.

Prudent ARC’s initial offer of 311 crore triggered a Swiss challenge, which took place on June 26.
However, no bidders expressed interest in the auction. If a bidder had participated, Prudent ARC would
have had the right to match the offer as an anchor bidder.
Prudent ARC’s all-cash offer would result in a 61% recovery for HDFC as the lender. Alvarez & Marsal
has been appointed by HDFC to handle the sale of the real estate portfolio. In the previous quarter (Q4
FY23), HDFC received a bid of around 1,100 crore from Omkara ARC for another pool of loans
including the hotel properties.
However, the bid fell short of expectations, leading to the sale not taking place. In FY23, Assets Care and
Reconstruction Enterprise (ACRE) purchased developer loans in two tranches at approximately 50% of
the loan value, resulting in significant recoveries. HDFC Bank’s spokesperson did not provide any comments regarding the matter.

Over the past quarters, asset quality at HDFC has shown improvement. The gross non-performing assets
(GNPA) for individual accounts decreased from 0.99% to 0.75% in Q4 FY23 compared to the previous year, while non-individual GNPA decreased from 4.76% to 2.9%.
The restructured loan portfolio accounted for 0.6% of the bank’s total assets under management (AUM) in Q4, down from 0.8% in the previous year. The mortgage lender merged with HDFC Bank effective July 1 and has become the largest player in the banking and housing finance space.