RBI’s loan recast formula lends relief to realty biz

Anuj Puri, Chairman, Anarock Property Consultants, feels the RBI’s move to permit banks to restructure loans of realty firms at the project level rather than the entity level is “indeed a good move. It will help restart projects which have been stuck due to the impact of the COVID-19. Both buyers and developers will stand to gain when stuck projects will eventually see the light of the day.”

He noted that from a buyers’ standpoint, they will no longer have to wait for an indefinite period for their homes. As for developers, they will get the requisite liquidity to eventually complete their projects.

Overall, it will ease liquidity within the cash-strapped real estate sector which was already struggling even before the pandemic set in. COVID-19 had only worsened its woes further, Puri noted.

As per RBI, the requirement of an inter-creditor agreement (ICA) in respect of the entity to which lending institutions have exposure is a basic feature of Prudential Framework for Resolution of Stressed Assets dated June 7, 2019, and consequently that of the resolution framework for COVID-19-related stress.

DLF’s rental arm DCCDL has raised Rs 2,400 cr debt from SBI to refinance its existing debt and fund future expansion plans, DLF’s group CFO Vivek Anand said. The debt has been raised at an interest rate of 7.35 pc, enabling it to reduce interest cost. DLF Cyber City Developers Ltd (DCCDL), the JV between DLF and Singapore sovereign fund GIC, has 33 mn sq ft of office and retail properties generating an annual rental income of Rs 3,500 cr. DLF holds 66.66 pc stake in DCCDL while GIC has the rest. The fund has been raised through the lease rental discounting route against a rental portfolio of 2.4 mn sq ft area in Cyber City, Gurugram. “It is one of the biggest disbursements by any public sector bank during the COVID-19 pandemic. This also clearly demonstrates our strong tenant profile and ability to generate cash for a long-term period,” said Anand, who joined DLF last year. DCCDL has a debt of around Rs 19,500 cr.