Rationale

The rating action for the bank facilities of Divyasree Tarbus Builders Private Limited (DTBPL) factors in the increase in leverage and moderate coverage metrics on account of additional top-up loan of Rs. 121 crore availed in May 2025. The company has re-leased around 80% of the vacant space at significantly higher rentals (Rs. 150–155/sft/month vis-à-vis ~Rs. 83/sft/month earlier) with around 70% of these rental inflows commencing in FY2026 and the balance will commence in FY2027. Despite higher annualised rentals, the leverage, as measured by total external debt/annualised net operating income (debt/annualised NOI), is expected to remain elevated at 8.8-8.9 times as of March 2026 (8.36 times as of March 2025), primarily owing to the incremental debt from the top-up loan availed during the year. Consequently, the debt coverage metrics are estimated to remain moderate in FY2026 and FY2027. The rating notes the high tenant concentration risk and high lease non-renewal risk or vacancy risk as ~37% of the leases (area occupied by Dell) is due for renewal in FY2026. However, the same is mitigated by the significantly lower (~Rs. 95 per sft) rent rates compared to the prevailing market rent rates (~Rs.140-160 per sft). The rating is constrained by the high geographical and asset concentration risks and vulnerability of debt coverage ratios to factors such as changes in interest rates or reduction in occupancy levels. However, the rating derives strength from the healthy occupancy as of August 2025 at 91% (same as of August 2024) for the assets, along with the estimated increase in rental income in FY2026 owing to higher average rent rate at Rs. 125-130 /sft/month against the earlier Rs. 95-98 /sft/month. The recent lease tie-ups have lock-in expiry of 3-3.5 years. Further, the company has incurred capex against the improvement of the asset, Divyasree Greens, which was initially build as a built-tosuit model for tenant Dell, thereby improving its marketability. The rating also considers the assets being favourably located at a prime location near Embassy Golf Links, at Inner Ring Road, Domlur, Bengaluru. DTBPL is also backed by the established track record of Divyasree Group in the development and management of commercial real estate assets. The Stable outlook on the [ICRA]BBB rating reflects ICRA’s opinion that the company will benefit from the favourable location of the assets and will sustain healthy occupancy levels at increased average rent rates, thereby improving the leverage in the medium term.