The promoters of DLF will list their real estate investment trust firm, DLF Assets Ltd (DAL), in Singapore in September to raise about $1.2 billion. DAL is wholly-owned by the KP Singh family and buys commercial property from DLF and collects lease rentals from it. With PE firm Symphony Capital (SC) Asia pulling out its stake from DAL after DE Shaw which did in January this year, the stage is set for a fast track listing of the entity. Citigroup and DBS are advising the company on the Singapore listing. When contacted, a DLF spokesperson declined to comment.
A fortnight ago, the firm announced that its subsidiary Caraf Builders has increased its stake in DAL from 50% to 91.9% by acquiring 245.2 million shares from private equity firm SC Asia for Rs 3,085 crore, or $694 million. SC Asia had invested $650 million in DAL through two tranches in May and November, 2008. Caraf, the holding company for DAL, has four rent-yielding properties in Gurgaon, located south of New Delhi, Kolkata and Chandigarh with a total leased area of 3.3 million square feet, the statement said. DAL also owns four special economic zones. Caraf has recently been merged into DLF. DAL was supposed to be listed in Singapore in April 2008, but the global meltdown later that year deffered the float. The combine entity has a rent yielding portfolio of 16 million square feet and provides a steady income stream to DLF.
The combined entity has eight rental assets with leased area of 9.7 million square feet, current assets of Rs 2,200 crore and debt of Rs 2,500 crore. The rentals in Gurgaon are about Rs 50-55 per sq ft; Chennai is at Rs 45-48 per sq ft and Hyderabad at Rs 40 a sq ft which is expected to go up in the coming quarters. Last year, DLF promoters along with their families and private firms, sold 9.9% stake in DLF to raise about Rs 3,750 crore, or $760 million to provide an exit route to DE Shaw, another investor in DAL.
The company is of the view that the listing decision is based on an assessment that the Singapore market has begun moving North and so it makes sense to list DAL around the middle of this year. Singapore has projected that its economy would expand by up to 5% this year. Coupled with this, the Reit market in the country is also looking up.