DLF Raises 2,400 Cr from SBI through LRDs

In the largest Lease Rental Discounting (LRD) transaction this year, realty developer DLF’s rental arm DLF Cyber City Developers Ltd (DCCDL) has raised Rs 2,400 crore from the country’s largest public sector bank, State Bank of India. In the backdrop of general concerns over liquidity for real estate and rental assets, the deal assumes significance as the funding carries an interest rate of 7.35 per centfor tenure of 15 years with a structured repayment schedule. The rate will be linked to SBI’s marginal cost of funds-based lending rate (MCLR). Most LRD transactions are usually sanctioned for tenure of up to 12 years. The financing from SBI sets a benchmark for LRDs in the country, and it is one of the biggest disbursements by a public sector bank during the pandemic. “The funding is certainly an endorsement of our robust commercial portfolio. Despite the current uncertainty, we are committed to reducing our borrowing cost while creating long term value for our stakeholders. Majority of the loan will be used to refinance existing debt, and the balance will be used to fund future expansion of the company,” said Vivek Anand, Group Chief Financial Officer, DLF. The funding has been secured against two rental assets with 2.4 million sq ft office spaces at DLF Cybercity in Gurgaon. DCCDL that counts Singapore’s sovereign fund GIC as its partner is planning to use the funds secured through this transaction to repay its debt worth Rs 1,950 crore raised earlier from mortgage lender Housing Development Finance Corp (HDFC), while balance will be utilized for future growth.