Top realtors corner LRD loans at cheaper rates

WITH THEIR CREDIT profiles rising despite largely stagnant interest rates, top commercial property developers have been able to borrow against rent receivables at a rate lower by 75-to-100 basis points in the past year.

- RAGHAVENDRA KAMATH & ANUPREKSHA JAIN

Lease rental discounting (LRD) rates for top commercial property developers fell also because of higher liquidity in the market, generated by the RBI's curbs on "evergreening of loans" and the strengthened real estate law driving away fly-by-night developers, according to experts.

"Banks have been lending selectively and lending based on quality of assets has improved with policy interventions by the government and the RBI," said Raj Menda, chairman of the supervisory board and co-founder, RMZ, one of the largest office developers in the country.

Menda said the curbs on "evergreening of loans" and the Real Estate (Regulation and Development) Act, 2016, which mandated the creation of the Real Estate Regulatory Authority (RERA), have turned out to be beneficial to quality developers. Evergreening, in simple terms, means rolling over of loans.