Akruti City, Omaxe, Sobha Developers [Get Quote], among other property developers, are pledging shares with lenders to provide additional security, apart from hypothecating properties to borrow funds, according to information submitted to the stock exchanges.

Promoters of Akruti, Omaxe and Sobha have pledged their shares with Indiabulls Financial Services [Get Quote], financiers like Dubai-based BankSarasin & Co and Credit Suisse as a liquid security for loans against properties.

"With prices of real estate stocks falling sharply, promoters have been pledging more shares to cover the margin. In the process, some of these promoters have pledged a large stake with Indiabulls," said the CEO of a real estate fund.

Real estate developers have been feeling the squeeze. Rising interest rates and slowdown have hurt sales, bringing down real estate prices 10 to 20 per cent across different micro markets.

On the other hand, rising steel and cement prices have increased input costs for developers, while the meltdown in markets has hampered their ability to raise funds at home or abroad.

Sources say Omaxe has raised loans of Rs 300 crore from Indiabulls and has repaid nearly two-thirds of it. On December 4, 2007, its promoters pledged 14.4 per cent stake, or 25,058,000 shares, with Indiabulls.

"Developers have provided assets, such as large pieces of land as collateral, but as additional liquid security promoters have provided a personal guarantee or pledged a part of their stake in the company," said a real estate analyst.

Akruti City, which, sources say, has raised loans of Rs 200 crore from Indiabulls, has subsequently repaid nearly Rs 120 crore. On December 31, 2007, Akruti's promoters pledged 5.86 per cent stake with Indiabulls, which increased the lender's stake in the company to 8.24 per cent.

On February 7, 2008, the promoters pledged 2.38 per cent stake with Indiabulls. As a result, Indiabulls' stake in Akruti went up to 10.62 per cent.

On September 11, 2007, Sobha Developers, which builds offices for IT major Infosys [Get Quote], pledged 7.81 per cent of the company's stake with Dubai-based Bank Sarasin & Co. A day earlier, the promoters had pledged 10.70 per cent with Credit Suisse.

The loans raised by promoters couldn't be confirmed but Sobha's company secretary said the loans went to the promoters and not the company.