WALL Street banks and leading international investors, who have relentlessly poured money in India’s red-hot property market, have now turned sellers. Today, they are looking at ways to unwind offshore structures created to side-step regulations that bar foreign loans in real estate. Close to $1-billion investments have been sold off in the early days of the subprime crunch, and $600-700 million are being hawked around. But there just aren’t enough buyers. Most of these were leveraged transactions, where large banks and funds borrowed money to buy securities issued by local real estate firms. These securities, masquerading as equity, were debt instruments promising a high fixed return. Global investors borrowed at a low rate abroad to buy these paper. Thanks to the subprime fiasco and credit woes that followed, there is a deleveraging of books taking place across markets, where investors are keen to pull out of investments made with borrowed funds. Banks like Lehman Brothers and Deutsche Bank, which had prefunded investors, are trying to sell the loans. Ideally, they would have preferred to do it over a longer period and at better rates. When contacted, the banks refused to comment. Besides the subprime crisis, the softening of rates in some real estate markets (other than Mumbai) may have also driven investors to pare their exposure. Significantly, such selloffs can happen without violating the three-year lock-in norm applicable to foreign direct investment (FDI) in real estate. The lock-in simply means that money cannot move out of India, but it does not stop a foreign investor selling the exposure to another foreign investor in an overseas transaction. Since investors route the money through special purpose vehicles (SPV) in Mauritius, they sell investments from such SPVs or sell the SPV itself. Interestingly, domestic real estate firms are also tapping Indian MFs and NBFCs to raise money locally since RBI has made it difficult for banks to lend to builders.