ICRA Nepal assigns LBB and A4+ to long term and short term loans of Chhaya Devi Complex

ICRA Nepal has reaffirmed the long-term rating of [ICRANP] LBB (pronounced ICRA NP L Double B) to NPR 2,000-million long-term loans of Chhaya Devi Complex Private Limited (CDCPL). ICRA Nepal has also reaffirmed the short-term rating of [ICRANP] A4+ (pronounced ICRA NP A Four Plus) to the NPR 50-million short-term loans (overdraft limit) of CDCPL. 

 Credit strengths

• Commissioning of the project without major delays; cost overrun covered through fresh equity injection
• Strategic location, brand recognition of Aloft and expertise of the hotel operator
• Inventory of saleable spaces and financial strength of promoters provide financial flexibility to the company
• Conducive environment for tourism-related ventures

Credit challenges

• Coverage ratios to remain moderate to weak over the medium term
• Increasing competition among the star hotels
• Limited geographical and segment diversification

About the company   

Incorporated in January 2008, Chhaya Devi Complex Private Limited (CDCPL) is a special purpose vehicle (SPV) created for the construction of a commercial complex with an embedded hotel. CDCPL owns and operates a Five-star hotel integrated with a commercial retail mall. The property is spread over a plot size of ~14 ropanis (~76,600 sq. ft/ 1.75 acres) in Thamel, Kathmandu. The 167-keys Five-star hotel (named Aloft Kathmandu Thamel) accounts for ~30% of the built-up area of the complex.

As of mid-July 2019, ~72% of the retail & commercial space within the complex has been sold outright and proceeds have been used as equity for completion of the hotel. The remaining ~28% space (including cinema hall, food court, etc) is managed by the developer to generate rental income.   

The hotel operates under the franchise of global hotel brand Aloft, as per the terms of the agreement with Starwood Asia Pacific Hotels and Resorts P. Ltd. The developer has also entered into an agreement with Nidra Hospitality Private limited, India, for the operations & management of the hotel.    

Major promoters of CDCPL include Mr. Prithvi Bahadur Pande, Mr. Nirmal Pradhan, Mr. Deepak Man Sherchan, Mr. Mijas Bhattachan, M/S Syakar Trading Concern, M/S Himalayan Infrastructure Fund and Mr. Maheshwor Prakash Shrestha. Mr. Maheswor Prakash Shrestha⁷ is the Managing Director of the company.   

CDCPL commenced operation from July 17, 2019, about six months after the formal inauguration of the complex.

 Instrument Details 

 Source: icranepal.com