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Case Study – Making Future Bright

A Bangalore based real estate family has developed commercial rentable office space in a prominent locality. The office space has been leased out for a period of 25 years with a steady increment of 15% in every 3 years. The rental has been securitised to invest in another under construction commercial space.

Due to increase in cost of the project, additional ₹ 7.50 crores were required to complete the project. The existing financier is not able to extend the required additional exposure citing the current rentals at ₹ 45 lakh in a month and supports only ₹ 35 crores of funding.

The assessment model plotted the rental for next 15 years and based on the NPV of the entire future rent inflow, the model suggested expected loan amount at ₹ 45 crores. The new financier took ₹ 45 crores exposure and the client has additional ₹ 8.68 crores in hand.