After raising Rs 2,000 crore by selling stakes in two projects, India's largest realtor DLF is planning to monetise some more housing projects through private equity as property sales continue to remain subdued.
After raising Rs 2,000 crore by selling stakes in two projects, India’s largest realtor DLF is planning to monetise some more housing projects through private equity as property sales continue to remain subdued.
DLF had, in September, sold about 50 per cent stake each in two upcoming projects in the national capital to Singapore’s sovereign wealth fund GIC for Rs 1,990 crore.
According to sources, the company has identified few more projects in Gurgaon and other cities for divestment.
The company is looking at monetising select residential projects through private equity till the real estate market improves, sources said, adding that the proposed deals would be smaller in ticket-size compared with GIC transaction.
With sluggish property market in last 2-3 years, DLF had announced in February this year that it would raise over Rs 3,000 crore through divestment or joint ventures in certain projects to improve cash flow and reduce debt.
As part of this strategy, DLF’s subsidiary DLF Home Developers Ltd (DHDL) last month entered into a joint venture with GIC for two upcoming projects located in central Delhi.
“GIC will invest approximately Rs 1,990 crore. The JV is expected to benefit from GIC’s experience of investing in integrated developments across the globe,” DLF had said.
The company sold around 50 per cent shareholdings in these two upcoming projects, adjacent to existing project ‘Capital Green’ at Moti Nagar here.
Sources said DLF wants to maintain the debt of its residential business (DevCo) at current levels by raising private equity funds at project level.
In the short-term, PE funds would be the substitute for the cash flow which would have normally come from sales.
DLF’s net debt stood at Rs 21,598 crore as on June 30, 2015, of which the net debt attributable to development business (DevCo) was Rs 7,598 crore while Rs 14,000 crore pertained to rental arm (RentCo).
In the rent business, DLF’s Board had earlier this month decided that promoters would sell their 40 per cent stake in the company’s rental arm DLF Cyber City Developers Ltd (DCCDL).
DLF would continue to hold 60 per cent stake in DCCDL.
Promoters will re-invest a significant part of the amount realised from the proposed sale in DLF Ltd, which in turn would utilise this fund to trim its debt.
Rental business’ debt could rise slightly till promoters sell their stake in DCCDL and reinvest significant part of that amount in DLF, sources said.
DLF expects to earn an annual rental income of Rs 2,400 crore this fiscal by leasing its commercial properties having 30 million sq ft of area.
The company has a land bank of nearly 300 million sq ft, of which about 50 million sq ft is under construction.