Actual property funding trusts (REITs) decreased their borrowing prices by about 200 foundation factors (bps) or extra in FY21 resulting from their robust credit score profiles and higher rankings.
Compared, high property builders reminiscent of Godrej Properties and the rental arm of DLF decreased their borrowing prices in FY21 by 110 bps and 145 bps, respectively.
Mindspace Enterprise Parks’ REIT’s common value of funds got here down 210 bps in FY21. The Mindspace REIT additionally did refinancing of Rs 1,150 crore of debt raised within the REIT by way of listed non-convertible debentures and market linked debentures. Mindspace REIT has a credit standing of AAA from score agency ICRA.
Devices rated AAA carry the bottom credit score danger. Refinancing means financing current loans once more with new loans at a decrease charge “We frequently search re-financing alternatives at REIT and the SPV (particular function automobile) degree to additional cut back our value of borrowing,” mentioned Vinod Rohira, chief government officer (CEO) at Mindspace REIT.
The common value of borrowing of Embassy Workplace Parks REIT got here down 180 foundation factors in FY21. It has refinanced Rs 3,280 crore in FY21, saved 336 foundation factors and raised Rs 5,200 crore at 6.9 per cent. Embassy REIT additionally has a credit standing of ‘AAA’.
“We imagine {that a} mixture of RBI (Reserve Financial institution of India) measures to extend liquidity in the course of the yr taken along with the growing confidence of our lenders within the total REIT mannequin comprising secure money flows, low leverage of twenty-two per cent to gross asset worth in addition to AAA score have led to a flight to high quality amongst our lenders. This resulted in discount in borrowing charges,” mentioned Aravind Maiya, chief monetary officer (CFO) at Embassy REIT.
Vishal Shrivastava, president, company finance, Anarock Capital, mentioned that REITs have higher credit score profiles than property builders.
Mathew Kurian Eranat, vice-president at score agency ICRA mentioned, “REITs have been borrowing via devices reminiscent of debentures the place the discount in benchmark yields have been greater than the decline typically seen in financial institution lending charges. Different builders typically entry credit score primarily via financial institution lending and couldn’t see an analogous discount in charges.”
Amongst high builders, DLF’s rental arm DCCDL reduced borrowing charges by 145 foundation factors on a yearly foundation, from 8.90 per cent in This fall of FY20 to 7.45 per cent in This fall of FY21.
Source: Newspolo
