DLF rental arm stake sale may get ~12K cr

Realty major DLF’s promoters are likely to sell 40 per cent stake in its rental arm — DLF Cyber City Developers Ltd — by September, a deal estimated to fetch around ~12,000 crore.

Realty major DLF’s promoters are likely to sell 40 per cent stake in its rental arm by September, a deal estimated to fetch around ~12,000 crore. According to sources, three global institutional investors — Blackstone, GIC and Abu Dhabi Investment Authority — have been shortlisted as buyers in DLF Cyber City Developers Ltd (DCCDL). Due-diligence process office space in the National is on and the agreement is likely to be signed by September. According to a recent report by DLF’s billionaire promoter, real estate consultant Knight KP Singh,andh is family will Frank in Delhi-NCR, office reinvest a significant part of the space leasing fell to 3.5 mn sq ft amount realised from the sale in the first half of 2016, compared into DLF Ltd. The realty major to 3.7 mn sq ft in the yearago in October had announced that period owing to lack of quality its promoters will sell 40 per supply. cent stake in DCCDL, which

“Research shows that the holds the bulk of office and unsold inventory levels have retail complexes. DLF would, dropped by seven per cent in however, continue to own the the first half of 2016 year-onyear, remaining 60 per cent stake in thus bringing some cheer DCCDL. to developers. Although In April, DLF’s bankers had Mumbai, Bengaluru and Ahmedabad circulated the information have shown positive growth, memorandum to 18-20 global NCR with its dismal performancestill remains a concern ,” institutional investors that are keen to purchase this stake. Shishir Baijal, chairman and According to the memorandum, managing director of Knight DCCDL has about 25-26 Frank India, recently said. million sq ft of leased commercial space with an annual rental income of about ~2,250 crore. DCCDL also has 20 mn sq ft of future development potential.

Of the DLF’s total net debt of ~22,202 crore, DCCDL’s share was at ~12,325 crore in the last financial year.

“With this proposed transaction, DLF will be able to achieve three of its main objectives — removal of conflict of interest, creation of a rental platform with large financial investors and reducing substantial portion of debt,” Saurabh Chawla, senior executive director, finance, had said in October. While announcing the annual result in May, DLF had said the intent of the transaction is to create a platform in partnership with long-term institutional investors to own and develop commercial assets.

“Grow the commercial business, organically and inorganically, and target high equity returns for the shareholders; it shall be a precursor to setting up of Real Estate Investment Trust in the medium term,” DLF had said in a presentation.

The deal will be an important step to “create two pure plays — residential business with zero debt and an independent commercial business”.