Blackstone, DLF, RMZ could take Reit route soon

DLF, India's largest developer, is looking to file for a real estate investment trust (Reit) in the current financial year, with the capital markets regulator, the Securities and Exchange Board of India (Sebi), clearing the norms for Reits on Friday.

"We are looking for an issue of Rs 12,000-1,4000 crore," said an executive in the company, adding that the proceeds from the issue will be used for debt repayment. "The issue should hit the market after the stake sale by our promoters."

DLF promoters are looking to sell 40 per cent stake in its rental arm DLF Cyber City Developers (DCCDL) for around Rs 12,000 crore by next month and investors such as GIC and Blackstone are in the race to buy that.

When contacted, DLF chief executive Rajiv Talwar said: "Sebi has sorted out most of the issues and we're looking to float an Reit soon," he said. He, however, declined to give a timeline for the issue, saying it depends on various approvals. DCCDL has 25-26 million sq ft of leased commercial space with an annual rental income of Rs 2,250 crore. It also has 20 million sq ft of future development potential.

DLF has a debt of Rs 22,500 crore. Sebi, which came out with relaxed norms on Friday, has allowed up to five sponsors, while also permitting hospitals and hotels under Reit. In addition, 20 per cent Reit money can be used for under-construction projects as opposed to only 10 per cent earlier.

According to a source, global private equity giant Blackstone and its partners could also hit the market with a Reit of about Rs 5,000 crore by early next year.

Blackstone is already working with its banker Morgan Stanley and law firm Amarchand Mangaldas on the same, the source noted. "They may not bring the entire portfolio for the first issue. They will do it in tranches."

Blackstone and its partners Bengaluru-based Embassy Group and Pune-based Panchshil own 30 million sq ft of assets. Blackstone could not be contacted for comments.

RMZ, the Bengaluru-based developer backed by Qatar Investment Authority, is also looking to file for an Reit by March next year, its chairman Raj Menda told Business Standard recently. According to Menda, the company is looking to list its Reit by the third quarter of 2017. "Preparations are at a preliminary stage and we are in the process of appointing bankers."