Phoenix Mills converts Rs 575-crore loans for lease rental discounting arm

MUMBAI: Phoenix Mills has converted a high cost debt into a lease rental discounting loan worth 575 crore in an arm, which is constructing a retail-led mixed use project in Kurla in central Mumbai. The debt for the 21-acre project is being converted by Standrad Chartered Bank and Religare Finvest, replacing previous loans taken from consortium of ten banks, including Indian Overseas Bank, Vijaya Bank, Indian Bank, Canara Bank, Corporation Bank, and three associate banks of State Bank of India. The tenure of this lease rental discount runs for seven years with cost of 13.5% against the earlier debt's peak of 16.5%, said sources who did not want to be named.

Lease rental discounting is a term loan offered against rental receivables to be derived from lease contracts with tenants at any property. The loan is usually provided to the leaser based on the discounted value of the rentals for a set time period and the underlying property value. Under the term loan set up, the tenants deposit their rentals directly in an escrow account with the lenders. Operational and other costs for the property are then taken care of through this fund and balance gets transferred to the lenders for the tenure of such a loan.

CEO Shishir Shrivastava confirmed the debt refinancing. He, however, refused to divulge details. Both Standard Chartered Bank and Religare declined to comment for the story. Phoenix Market City Kurla has already leased out three-quarters of the 1.3 million-sq ft retail space at average monthly rental of 95 per sq ft.