Bangalore-based real estate developer Prestige Group is in the advanced stages of securing a 1,050 crore debt refinance from a consortium led by Kotak Mahindra Bank. The secured facility, offered at an interest rate of 10.81%, is intended to replace high-cost borrowing from Yes Bank and address significant liquidity challenges facing its high-profile mixed-use project in New Delhi's Aerocity.
Refinancing Strategy and Secured Debt Facility
The new debt facility comes with a three-year tenor, set to mature in January 2028, and will be raised at the Bamboo Hotel and Global Centre in Delhi. This financing move is being orchestrated through BHGCPL—a joint venture between Prestige Group and DB Realty—which is responsible for developing the expansive Aerocity project. The initiative is a critical step toward streamlining the developer’s financial structure and reducing the burden of costly borrowing.
Addressing Liquidity Pressures
Recent reports by ICRA indicate that BHGCPL has been under significant liquidity pressure. As of September 30, 2024, the company held only Rs. 51 crore in unencumbered cash while facing pending project costs of Rs. 2,074 crore. To bridge this funding gap, the following measures are planned:
- New Debt: Approximately Rs. 1,020 crore will be raised.
- Receivables: Rs. 57 crore is expected from receivables owed by Delhi International Airport Ltd. (DIAL).
- Tenant Deposits: An infusion of Rs. 25 crore from tenant security deposits.
- Promoter Contributions: Additional equity injections by the promoters.
This comprehensive strategy is designed to ensure that liquidity constraints do not impede the progress of the Aerocity project.
Aerocity Project: A Flagship Mixed-Use Development
The Aerocity project is a cornerstone of Prestige Group’s development portfolio. The project features:
- Luxury Hospitality: Two premium hotels, including the St. Regis with 189 rooms and the Marriott Marquis with 590 rooms.
- Commercial Spaces: A 0.3 million sq. ft. conference centre and 0.61 million sq. ft. of office space under the Prestige Trade Centre banner.
With a total project cost of Rs. 5,400 crore, the financing structure comprises 46% debt, 51% promoter equity, and 3% sourced from receivables and tenant deposits. This balanced funding mix is critical for the timely completion and operational success of the development.
Looking Ahead
As Prestige Group advances with its refinancing efforts, the successful closure of this Rs. 1,050 crore facility is expected to significantly reduce its high-cost debt exposure and provide the necessary financial relief. This, in turn, will support the completion of the Aerocity project—a development that is poised to set a benchmark in New Delhi’s mixed-use landscape.
The refinancing initiative not only reflects the company’s proactive approach to financial management but also underscores its commitment to delivering high-quality developments despite challenging market conditions.