DLF raises Rs 525 crore via securities backed by Delhi retail mall

NEW DELHI: DLF Emporio, a subsidiary of India’s largest real estate developer DLF, has raised Rs 525 crore through the country’s first commercial mortgage backed security (CMBS) issue.

In a CMBS issue, which is a new way for Indian real estate developers to raise funds, a company issues non-convertible debentures (NCDs) to investors and gets money upfront. Interest on this money is paid every month using rentals from the commercial property that are put in an escrow account and at the end of the CMBS tenure, the company gets to pay off the principal.

DLF Emporio owns and operates a 300,000 sq ft luxury mall in New Delhi. The funds raised by the company were at a coupon rate of 10.9% and carry a legal maturity of 7.5 years, and the interest will be paid by the company through the rentals accruing from the mall.

CRISIL had last month rated the proposed CMBS to be issued by issue by two subsidiaries of DLF—DLF Emporio Ltd and DLF Promenade Ltd—as stable. Trust Investment Advisors Pvt. Ltd was the sole arranger for the issue.

“This is a landmark issuance and has been completed at a competitive pricing. This issue will prove to be a trendsetter and will pave way for more such issuances in the future,” DLF said.

DLF is also in the process of raising Rs 375 crore by issuing CMBS against another mall in Delhi that is owned by its subsidiary DLF Promenade.