Private equity firm Blackstone Group-owned special purpose vehicle (SPV), which houses Indiabulls Finance Centre (IFC) as one of its assets, is looking to raise about $100 million ( ₹725 crore) by selling non-convertible debentures (NCD) to refinance its debt and for capital expenditure.
Nearly half of the total funds raised, worth ₹300 crore, will be used to refinance the existing construction finance facility of the ‘Tower 4’ (T4) at the Mumbai-based commercial property, which will have a total leasable area of about 900,000 sq. ft.
The T4 construction, according to a 13 January note by rating agency Icra Ltd, is in advanced stages with about 24% of the project cost pending as on September 2019. The balance amount would be used for investment in group companies and other business expenses. Icra Ltd, which rated the NCDs A-/Stable, said the company will capitalize the interest on the debentures for the first 30 months and pay out the cash coupon for the last six months.
During the first 30 months, the annual surplus (the amount equal to the receivables from Towers 1-3 after deduction of taxes, fixed expenses and capital expenditure up to ₹15 crore calculated on an annual basis) will be calculated and used for coupon payment of the NCD.
“The NCD along with capitalised interest would be redeemed at the end of three years, which exposes the company to refinancing risk in FY2023 and the same hinges on timely leasing of tower 4 (T4) at adequate rental rates," Icra said in its note.
Located in Lower Parel adjacent to the 100 ft. wide Senapati Bapat Marg, IFC has a total leasable area of 1.67 million sq. ft. comprising Tower 1, 2 and 3. Its top five tenants, who occupy about 67% of total leasable area, contribute to 68% of total rental revenue.
Blackstone declined to comment to Mint’s email query. Blackstone Group is the largest holder of office spaces in India with over 69 million sq. ft. of offices across Bengaluru, Pune, Hyderabad, Mumbai, Delhi NCR and Chennai.
The New York-based investor had first bought 50% stake in some of Indiabulls Real Estate Ltd’s office projects in Mumbai, in early 2018, for ₹4,750 crore. In September 2019, the Mumbai-based developer divested the balance 50% in these projects to Blackstone. Later, it had also bought Indiabulls’ office park in Chennai for ₹900 crore.