DLF hires advisers to re-look at hotel biz

DLF has appointed advisers to prepare a strategy for sale of its hotel portfolio.

“As part of a strategy to focus on core operations, advisers have been appointed to evaluate strategic alternatives to our hospitality businesses. We expect to come up with an update in the next six months,” Saurabh Chawla, executive director, finance, said in a conference call.

DLF, the country’s largest real estate company according to market capitalisation, has till now focused more on selling its hotel arm, Aman Resorts, in which it bought a 97 per cent stake in 2007 for $400 million. It had given mandate to JP Morgan and Goldman Sachs.

As on January 2011, DLF had a land parcel of 399 million square feet (msft). This has come down to 367 msft. It had earmarked 11 msft for hotels. Out of this, it is looking at plotted development on three msft.

The rest eight msft hotel land would be part of the sale, said a source close to the development.

The company spokesperson denied any plan to sell the entire hotel business.

DLF has set a divestment target of Rs 10,000 crore. The earlier target was Rs 45,000 crore. It expects to generate Rs 6,000-7,000 crore from this in the next two-three years.

The management said the main focus this year would be debt reduction. It said the company would become net debt-free in the next three-four years. DLF’s debt has risen by Rs 379 crore since January 2011, taking the consolidated gross debt to Rs 24,192 crore and the net debt to Rs 21,424 crore on March 31.

DLF, which has been increasingly focusing on selling plots since the second half of 2010-11, has decided to refine its strategy. The management said that mid-income and premium income housing projects had seen a drop in sales and thus it would launch only luxury housing projects and plots this year.