DLF raises $90M in India’s first CMBS issue for its luxury mall in Delhi

DLF Emporio Ltd, a subsidiary of DLF Ltd, has successfully placed India’s first Commercial Mortgage Backed Security (CMBS) issue of Rs 525 crore ($89.9 million), with a coupon rate of 10.90 per cent, according to a stock market disclosure. The legal maturity of the securities is 7.5 years.

DLF Emporio owns and operates approximately 3 lakh sq. ft of a luxury mall in New Delhi.

The instrument marks an innovative step in corporate bond market and opens up a new fundraising avenue for the real estate sector.

Under CMBS, funds available with the issuer during the tenure of the instrument are higher than lease rental-discounting loans from banks as these loans have a structure where principal repayment is amortised whereas CMBS instruments give the option of bullet repayment. Further, CMBS instruments have the benefit of fixed interest rates and usually have lower funding costs.

The arranger for DLF Emporio’s CMBS issue was Trust Investment Advisors Pvt. Ltd.

Late last month, rating agency CRISIL had assigned stable rating to DLF’s proposed CMBS issue. CRISIL had assigned AA(SO)/Stable ratings to Rs 525 crore and Rs 375 crore NCDs by DLF Emporio and DLF Promenade, respectively.

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