Real estate developer Skylark Mansions Pvt. Ltd has raised Rs105 crore in structured debt from non-banking financial company (NBFC) Xander Finance Pvt. Ltd, primarily to give an exit to existing investor Motilal Oswal Real Estate in a housing project. The Bengaluru-based firm will also use some of the money raised on the project Skylark Dasos on Hennur Road in Bangalore.
Motilal Oswal Real Estate, had invested around Rs 55 crore equity capital in the project at an early stage in 2015.
“The project, which has around a million sq. ft of saleable residential space, will be launched shortly,” said Saleem Sheriff, chairman and managing director, Skylark Mansions.
Structured debt in the real estate sector is commonly given for refinancing loans or takeover of existing debt, last mile project funding, and construction finance for developers who may not be able to get bank funding.
Earlier this year, Xander Finance had put in around Rs130 crore in Adarsh Developer’s project in Bengaluru. It has also been lending to projects in Chennai and National Capital Region (NCR).
According to a March research report by property advisory Knight Frank, NBFCs have gained significant market share over the previous two years and currently contribute about 18% of the total institutional funding requirement of real estate sector. While NBFCs have gained a larger share, from 12% in 2015 to 18% in 2016, PE funding has dropped from 61% to 58% in the same period.
Today, nearly 65-70% of domestic investments in real estate, both from NBFCs and private equity funds, are mainly refinancing transactions. “Debt is going to be the mainstay of developers trying to run their business on schedule. In a debt-centric market, investors have given money in anticipation that sales will return,” said Shashank Jain, partner, transaction services, PwC India.
Source: Live Mint