Peninsula Land to raise Rs 180 cr via NCDs, Rs 100 cr via land sale

The Mumbai-based property developer of the Ashok Piramal Group, Peninsula Land (PLL), is looking to raise Rs 180 crore through non-convertible debentures (NCDs) to refinance debt and extend its debt maturity. PLL is looking to raise the NCDs in two tranches and already has Rs 1,160 crore of NCDs in its books, according to rating firm ICRA.

Details about refinancing and by how much it will extend its debt is not known. Additionally, PLL is looking to raise another Rs 100 crore through land sales and recoupment of advances extended earlier for acquisition of projects. According to sources, it is evaluating selling one of its land parcels in Pune. An e-mail to the company spokesperson did not elicit a response. The fundraising plans are crucial as it needs to pay Rs 250 crore in the current financial year and Rs 300 crore in FY2017. It had debt of Rs 2,100 crore as on September 30.

"..PLL's plans of monetising non-core and long gestation projects, in order to deleverage its balance sheet provides comfort. Further, the company also has access to un-mortgaged land parcels, which provides the company with refinancing capability should the need arise," ICRA said. ICRA has an 'A' rating on the proposed NCD issue.

"PLL's existing land-bank is largely entirely paid for and all projects to be developed on the existing land-bank are residential projects where milestone-linked customer advances could support cash flows during the project construction phase," the rating firm said.

Anlaysts said the idea to sell land is a good idea to deleverage the balance sheet.

"They are facing some cashflow problems and sales have been weak in some of its projects. If they are selling land, it is a great way to reduce debt.," said an analyst who did not want to be quoted.

NCDs have become a popular way of raising funds for real estate companies and for the investors as the latter get fixed coupon on the instrument. While listed developers raise funds at 12 to 13 per cent, private companies raise at 16 to 18 per cent.

Last year, PLL reportedly raised Rs 525 crore through NCDs after it bought five-acre land in Mumbai from Mahindra Lifespace Developers and the Kanoria family, joint owners, for about Rs 650 crore.

DLF Ltd, the country's largest developer by market value, proposed raising up to Rs.5,000 crore through NCDs on a private placement basis, the firm said June last year.

After that DLF raised Rs 1000 crore through NCDs.