Light metro to adopt REIT for payback

THIRUVANANTHAPURAM: The proposed light metro projects would be the first ones in the state to pay back their investment through REITs (Real Estate Investment Trusts). The crisis-ridden state government will raise funds to meet the running cost of the light metro projects through property development by adopting REIT model. The projects are estimated to cost approximately '6,728 crore when completed in 2021.
The plan is to acquire nearly 1 acre land in proximity to the proposed light metro stations and develop flats, malls and commercial establishments under PPP (Public Private Partnership) mode. The principal amount of the loan raised through banks will be paid back through this.
Managing director of Kerala Monorail Corporation Ltd (KMCL) – which would be soon rechristened officially as Kerala Rapid Transit Corporation (KRTC) – P I Sheik Pareeth said it was impossible to pay back the loans with the income generated from the journey ticket cost. “Around 60 cent to 1 acre land would be acquired in proximity to the stations. We have given direction to NATPAC to identify land for the purpose,” he said. There are around 19 stations in the 22 km stretch in the state capital from Technocity to Karamana.
Mr Pareeth told DC that Agence Française de Développement (AFD) – the French overseas development agency – had agreed to fund 30 per cent of total cost of the light metro projects in the state at an interest rate of 1.8 per cent. “The state and the Centre will share 20 percent each to cover the total project cost and the viability gap would be raised through bank loans. Nearly '3,300 crore will be borrowed from domestic and foreign banks as loan,” said Mr Pareeth.
“The potential development areas will be the stretch between Technocity and Technopark. The government will provide land for commercially viable projects including flats and malls to draw the young crowd and encourage them to adopt mass rapid transport system,” he added.