Bengaluru: Piramal Finance Pvt Ltd, the non-banking financial company (NBFC) of Piramal Enterprises Ltd, has sanctioned investments of around Rs 2,000 crore from its recently launched Flexi Lease Rental Discounting (LRD) scheme for completed commercial office and retail assets, the company said on Wednesday.
It will invest Rs440 crore in The Wadhwa Group’s office property in Mumbai’s Bandra Kurla Complex and Rs580 crore against ASF Group’s information technology (IT) special economic zone (SEZ) project ‘ASF Insignia’ in Gurgaon.
The remaining Rs1,000 crore or so will be deployed in Reliable Group’s projects in Navi Mumbai and Sushil Mantri-led Mantri Group’s project in Pune.
In November, Piramal said it plans to finance completed commercial projects, including office and retail assets, through a flexible lease rental discounting (LRD) model, as part of its strategy to diversify into commercial realty.
The LRD model of financing is a slightly longer-term funding, where the project becomes rent generating and developers repay from those lease rentals.
“We are delighted with the industry response to our recently launched product Flexi LRD that aims to lend substantial quantum of money on flexible terms against a marquee asset of a Tier 1 developer. In November 2016, we announced our target for LRD to be Rs 10,000 crore for the next 12-15 months and we have already achieved 20% of it within three months of its launch,” said Khushru Jijina, managing director, Piramal Finance.
“We remain positively inclined towards commercial as an asset class and look forward to actively scaling up our position within this space,” he said.
“...The LRD offering will allow us to leverage our marquee projects and fund developments that we have in the pipeline,” said Navin Makhija, managing director, The Wadhwa Group.
The Wadhwa Group’s project in BKC, for instance, is already leased prominent retail and food and beverage outlets. Piramal has committed Rs440 crore under a seven-year facility with proceeds being used towards a takeover of loans from existing lenders and reduce the overall cost of funds for existing projects of the Wadhwa Group.
The deal is secured against an exclusive mortgage of the project, of which 98% is leased, with charge overall present and future receivables.
In the ASF transaction, the project ASF Insignia is a 9.2 lakh sq. ft. building which is fully leased large multi-national tenants. Piramal has committed Rs 580 crore out of which Rs 435 crore has been disbursed.