Lease Rental Discounting

Lease Rental Discounting is a financial product that allows property owners to obtain immediate funds by discounting anticipated rental income. The lease agreement of the property acts as collateral, and rental receipts are utilized to determine loan eligibility.

Property owners, whether individuals or corporations, who possess commercial or residential properties leased to financially reliable tenants, such as corporations, multinational companies, or public sector undertakings, and who have a valid registered lease agreement with a minimum remaining tenure of three years, qualify for eligibility.

Typically, one can expect to receive 60-70% of the net present value (NPV) of anticipated rental income throughout the duration of the lease. The precise figure is influenced by factors such as the creditworthiness of the tenant, the remaining lease term, and the value of the property.

Indeed, the current lease agreement remains in effect without any modifications. The tenant maintains their occupancy and fulfills their rental obligations according to the terms of the agreement. Only the rental income is assigned to the lender for the purpose of loan repayment.

Most LRD agreements require either the substitution of the tenant with another financially reliable tenant or the repayment of the remaining loan. In some instances, certain agreements allow for conversion to a standard LAP (Loan Against Property).