Piramal Fund Management (PFM), the financial services arm of the Piramal Group, has approved two more investments worth Rs 1,020 crore (around $152 million) under its recently launched flexi lease rental discounting (LRD) loan scheme for completed commercial assets that include office and retail space.
The latest transactions have helped the company achieve almost one-fifth of the targeted book size of Rs 10,000 crore by FY2017-18 under the scheme that was announced in November, the firm said in a statement.
The transactions involve a Rs 440 crore investment in Wadhwa Group’s commercial property located in the prime business district of Bandra Kurla Complex in Mumbai; and a Rs 580 crore investment in ASF Group’s IT SEZ development, ASF Insignia in Gurgaon.
Wadhwa Group’s commercial property is leased to retail and food and beverage outlets, while ASG Group's building is fully leased to MNC tenants including IBM and Ericsson, it said.
The financial services firm had earlier sanctioned investments for Reliable Group in Mumbai and Mantri Group in Bangalore as part of the LRD loan scheme.
Khushru Jijina, managing director, Piramal Fund Management, said the firm has remained positively inclined towards commercial property as an asset class and looks to actively scaling up its position within the space.
The commercial real estate market has picked up on the back of healthy leasing activity, leading to a positive impact on rentals. Office space consumption across the top cities was around 11 million sq ft in Q3 2016, according to real estate consultancy firm CBRE. This was the highest level of absorption in the past 10 quarters.
Piramal Fund Management has introduced a slew of innovative products for the real estate market. Last year, it added a new strategy to deploy capital to select existing development partners. The firm said it would allow some borrowers to draw from a pre-sanctioned limit like a pre-approved loan, a move that would allow borrowers to get funds quicker.
The financial services firm, which is one of the active providers of capital in the residential real estate market, also has an exposure to the sector through schemes such as Mumbai Redevelopment Fund and Apartment Fund, among others.
Piramal Fund Management focuses on real estate, addressing funding across the entire capital stack ranging from early stage private equity to senior secured debt and even construction finance, as well as structured finance to firms operating in sectors other than real estate.
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