• Requirement for Payment for TDR/ Fungible FSI
• Society Redevelopment/ SRA
- No Land available for Mortgage
- Requirement of additional Collateral (How many times Cover)
• One of the solutions is 'collateral free' loans offered by NBFC's and structured debt by PE funds based on net cash flows.
• Balance Transfer
- For developers funded by PEs at Land acquisition/ Approvals stage
• NOW Approvals are in place
• Replacement of PE - High cost debt to Lost cost debt funding
• Last-Mile Funding
• Take over of projects through JV/JDA
- Bring together ‘Seller’ & ‘Buyer’ along with ‘Funding’
• Factors causing higher ROI for RE project bank finance;
- No industry status
- On RBI’s cautionary list
- Higher provisioning norms
• Leading to banks more money being blocked
* Subject to developer profile, project stage, purpose of funds, etc.
Transaction structuring
- Based on factors including
• Projects-mix (SRA/ redevelopment/ plot development)
• Project stage (acquisition/ approval/ construction)
• Purpose of funding (Balance Transfer/ Further payment of TDR/Fungible premium)
• JV/ JDA funding
Transaction Terms & conditions and Documents
- Competitive Interest Rates/Processing Fees
- Tenure/ Moratorium/ Repayment period
• JV/ JDA funding
- Pre-payment charges
- Clauses sanction letter and in final loan/DTD documents
Post Disbursement
- Disbursement of balance loan tranches
- Project monitoring
Group Related
- Project Delivery
• Construction completed (In Square feet/ No. of projects delivered)
• PE (Over Million(s) sq ft preferred)
• NBFCs (>2/5 lacs sq ft & linked to funding ticket size)
• Number/ Type of projects
• Construction timelines, delays, if any
- Sales performance
• Past projects- Sold/Unsold
- Credit Profile
• Positive Credit HISTORY preferred
Project Related
- Location
• Tier I cities – PE/ Banks/ NBFCs
• Tier II – Banks/ NBFCs
- Current project’s Sales velocity
- Stage of the project
- Fresh loan or Refinance/Take over
• Financial Closure means;
- There is or there will be enough money or cash inflows to complete the project in all respects till OC.
• Three main sources for Financial Closure;
I. Builders Equity
II. Sales advances
III. Project finance/ Construction finance
• Why Financial Closure
- Changes in Business Scenario / Government Regulation
- Tapering of Investor’s interest in real estate
- Commitment of project delivery under RERA legislation
- Impact of GST – Customer looking for ready property impacting slower sales in under construction property
• Uninterrupted construction progress with Construction finance will provide confidence to potential customers