Names and identifying details in this case study have been changed. The structure, the numbers and the sequence are as they happened.
The requirement
A family business in Pune owned a commercial building let to three tenants, two of them established corporate occupiers. The family wanted ₹12 crore to fund an unrelated business expansion, and was reluctant to sell the building — correctly, since it was their most stable income.
Their first instinct was a loan against property, which their existing banker had offered at a modest amount based on a conservative valuation.
Why lease rental discounting fitted better
A loan against property is assessed on the value of the asset. Lease rental discounting is assessed on the rent the asset produces, and repayment comes from that rent rather than from the borrower's other income. Where a building is tenanted by strong occupiers on registered leases, the second route usually supports a larger amount on better terms.
The two corporate leases had a long unexpired term with documented escalation. That, rather than the valuation, was the strength of this case.
What we structured
- ₹12 crore lease rental discounting facility against the two corporate leases
- Tenure matched to the unexpired lease term, so the facility could not outlive the income repaying it
- An escrow arrangement, with rent credited directly to the servicing account
- The third tenancy, which was shorter and to a smaller occupier, deliberately left out of the computation rather than stretched to inflate the eligibility
The outcome
Sanctioned and disbursed inside six weeks. The family retained the building, the tenants were unaffected, and the instalment is paid by the rent rather than by the business.
What this case shows
The choice of product decides the amount more often than the choice of lender does. The same building, the same family and the same bank produced a materially different offer once the case was built on the rent instead of on the valuation.
Leaving the weakest tenancy out of the computation cost some headline eligibility and made the file credible. That is usually the better trade.