One of the Largest LRD Refinancing By Bank in CRE

US-based private equity fund manager Blackstone has refinanced lease rental discounting (LRD) loans worth Rs 2,500 crore with State Bank of India (SBI). It will be one of the largest such LRD refinancing by a bank in commercial properties in recent years. The refinancing was done to avail of better interest rates. The refinancing was carried out for LRDs of properties, including One Indiabulls Centre and Indiabulls Finance Centre, which were bought from Indiabulls Real Estate and also the One BKC property bought by Blackstone last year. Though the earlier rates for the LRDS stood at around 8.15 per cent, after refinancing, Blackstone got a rate of 7.5 per cent.  SBI said these are marginal cost of funds-based lending rate (MCLR)linked rates. “MCLR for one year is 7 per cent now. With tenure and risk premium addition, effective rates are in the range of 8.5-9.25 per cent. SBI is active in the Mumbai and Bengaluru markets for properties with prominent tenants with almost full occupancy.” LRD refinancing picked up in recent months as rates started declining. LRD rates have fallen from 11.8 per cent in the second quarter (Q2) of last calendar year to 8.5 per cent in Q2 of this calendar year.