Lease Rental Discounting for Corporate Clients - Overview

• LRD allows corporates to access funds against future rental receivables
• The facility is generally secured against an eligible income-generating property and its lease rentals
• Loan eligibility may depend on rental income, lease tenure, property value, tenant profile, and repayment capacity
• Funds can be used for various business and financial requirements, subject to lender terms
• Help businesses unlock the value of predictable rental cash flows without immediately selling the property

Lease Rental Discounting is a secured financing option where future rental receivables from a leased property are considered while determining the financing amount. It can help property-owning corporates access liquidity while continuing to earn rental income from their commercial property.

LRD may be considered for:

• Raising funds against rental income from eligible commercial properties
• Supporting business expansion and working capital requirements
• Funding planned business investments
• Managing large financial commitments
• Improving liquidity without selling the underlying property

Lease rental discounting works by converting future rental receivables from an eligible leased property into immediate funds. The lender assesses the property, lease agreement, rental income, tenant profile, and other applicable criteria before determining the loan amount.

Follow these steps to understand how LRD works:

1. The corporate owns or holds an eligible income-generating commercial property.
2. The property is leased to a tenant under a valid lease agreement.
3. The lender evaluates the property, rental income, lease tenure, and tenant profile.
4. Based on the assessment, the lender determines the eligible loan amount and applicable terms.
5. The corporate receives the approved funds and repays the loan as per the agreed repayment schedule.

Example:

Suppose a company owns a commercial property that generates regular rental income from a long-term lease. Instead of waiting to receive the rentals over the lease period, the company can use the eligible rental receivables to raise funds through LRD, subject to the lender's assessment and terms.

Lease Rental Discounting is generally designed for corporate entities that own eligible income-generating properties and receive rental income under a valid lease agreement. The lender may assess the company's financial profile, property ownership, lease documentation, tenant profile, rental receipts, and repayment capacity.

Eligibility may depend on:

• Corporate or business constitution
• Ownership of an eligible commercial property
• Existing lease or rental agreement
• Regular rental income
• Tenant profile and creditworthiness
• Property location and market value
• Financial profile and repayment capacity

Corporate applicants may need to submit documents that establish their identity, financial position, property ownership, and rental income. The exact document requirements can vary based on the lender and applicant profile.

Commonly required documents may include:

• KYC documents of the company and authorised representatives
• Company incorporation and registration documents
• Financial statements and income tax returns
• Bank account statements
• Property ownership documents
• Registered lease or rental agreement
• Rental receipts or bank statements showing rental credits
• Property-related approvals and documents, where applicable
• Other documents requested by the lender

LRD can offer corporates a way to access liquidity from an existing income-generating asset. Some potential benefits include:

• Access to funds: Corporates can unlock funds against eligible future rental receivables.
• Better liquidity management: The facility can help meet planned business expenses and financial obligations.
• Continued property ownership: The company can retain ownership of the underlying property while raising funds.
• Predictable rental cash flows: Existing rental income may support the lender's assessment of repayment capacity.
• Potentially higher-value financing: Eligible corporates with valuable commercial properties and stable rental income may be able to access substantial funding, subject to lender assessment.

In conclusion, lease rental discounting for corporate clients can help businesses unlock the value of future rental receivables from eligible leased commercial properties. It can provide liquidity while allowing the company to retain ownership of its income-generating property. Before applying, corporates should assess their rental cash flows, lease terms, property value, repayment capacity, and the lender's eligibility criteria.