DLF raises Rs 2,400 crore from SBI by way of lease rental discounting

MUMBAI | NEW DELHI: In the most important Lease Rental Discounting (LRD) transaction this 12 months, realty developer DLF’s rental arm DLF Cyber City Developers Ltd (DCCDL) has raised Rs 2,400 crore from the nation’s largest public sector financial institution, State Bank of India.

In the backdrop of normal issues over liquidity for actual property and rental belongings, the deal assumes significance because the funding carries an rate of interest of seven.35 per cent for tenure of 15 years with a structured reimbursement schedule. The price will likely be linked to SBI’s marginal value of funds-based lending price (MCLR). Most LRD transactions are often sanctioned for tenure of as much as 12 years.

The financing from SBI units a benchmark for LRDs within the nation, and it is among the largest disbursements by a public sector financial institution throughout the pandemic.

“The funding is actually an endorsement of our strong industrial portfolio. Despite the present uncertainty, we’re dedicated to lowering our borrowing value whereas creating long run worth for our stakeholders. Majority of the mortgage will likely be used to refinance present debt, and the steadiness will likely be used to fund future growth of the corporate,” mentioned Vivek Anand, Group Chief Financial Officer, DLF.

The funding has been secured in opposition to two rental belongings with 2.four million sq ft workplace areas at DLF Cybercity in Gurgaon.

DCCDL that counts Singapore’s sovereign fund GIC as its associate is planning to make use of the funds secured by way of this transaction to repay its debt value Rs 1,950 crore raised earlier from mortgage lender Housing Development Finance Corp (HDFC), whereas steadiness will likely be utilized for future development.

“The DLF group has a historical past of zero default of all our loans. We are consistently trying to optimize our treasury portfolio and cut back prices. This mortgage from the nation’s largest public sector is a step in that path,” mentioned Navin Kedia, CFO, DCCDL.

Currently, the corporate has a complete debt of round Rs 19,500 crore and can stand diminished to Rs 17,550 after the reimbursement of HDFC mortgage. ET’s e mail question to SBI remained unanswered till press time.

According to financing consultants, the dimensions and tenure of the transaction demonstrates the corporate’s numerous tenant profile and its potential to generate long-term money flows from its actual property asset portfolio.

Lenders have turned cautious in regards to the profile of debtors even when the deal is backed by a stream of regular revenue move. The funding state of affairs continues to be tight and would take some extra time earlier than it comes again to normalcy, they mentioned.

DLF has an operational rental asset portfolio of round 35 million sq ft throughout the nation with over 1,600 tenants of which 60 per cent are giant multinational corporations. DCCDL has maintained 95 per cent occupancy degree and has collected 96 per cent of its leases over the last two quarters marked by the Covid19 pandemic. With this new transaction, the corporate could have round 23 million sq ft of its whole rental portfolio monetized by way of LRDs.

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