DLF to divest or opt for project JVs to raise Rs 3,000 cr

Real estate major also looking to set up two Real Estate Investment Trusts in next fiscal

Aiming to reduce its debt, the country’s largest real estate player DLF plans to raise  Rs 3,000 crore through divestment or joint ventures in certain projects.

It is also looking to set up two real estate investment trusts in the next financial year.

“The current value of deals in the pipeline, at various stages of negotiations, due-diligence and documentation exceeds Rs 3,000 crore. We are in dialogue with a few private equity players for part cash out in some marquee projects before launching in the financial year 2016,” according to an analysts’ presentation.

The DLF board has appointed a committee of independent directors to do a strategic review of the RentCo business and the committee has appointed two investment banks — JP Morgan and Morgan Stanley — to advise them of a way forward which will create sustainable, long term income for DLF and its shareholders.

DLF expects to keep the net debt of DevCo (development arm) range bound through tactical divestments or JVs with strategic or financial investors of certain projects.

The company is on divestment spree to reduce its high debt, which increased by about Rs 400 crore to Rs 20,336 crore as on December 31, last year.

The current attributable net debt to DevCo (development arm) is Rs 6,350 crore and to RentCo (rental business) is about Rs 14,000 crore.

While DLF wants to maintain the debt of DevCo range bound by raising private equity funds, the company plans to cut debt of RentCo through launch of REITs.

“With the REITs around the corner, form two REIT platforms to tactically monetise almost 30 million sq ft of commercial assets, thereby increasing cash flows and reducing debt,” it said.

One REIT platform would be for office and other for retail assets with the first one expected in fiscal year 2016. By end of this fiscal, DLF is on target to achieve an annuity income of about Rs 2,400 crore on an asset base of 30 million sq ft.

Yesterday, it had posted a nine per cent decline in its consolidated net profit at Rs 131.79 crore for the third quarter ended December 31 this year owing to low sales and higher finance cost.

Income from operations fell by five per cent at Rs 1,956.72 crore for the third quarter ended December 2014 from Rs 2,058.42 crore in the same quarter previous year.