DLF to launch Rs 3,600cr CMBS issue in next two months

Company also plans to launch its first Real Estate Investment Trust this fiscal to monetise its commercial assets

India's largest realty firm DLF is likely to raise about Rs 3,600 crore this quarter through the issue of securities, backed by its IT-SEZ, as part of strategy to replace costlier debt.

DLF also plans to launch its first Real Estate Investment Trust (REIT) this fiscal to monetise its commercial assets.

"We are actively working with rating agency and investment bankers for the Commercial Mortgage Backed Securities (CMBS) issue," DLF Chief Financial Officer Ashok Tyagi told PTI.

He did not give any timeframe for the launch of CMBS. Sources, however, said it could be launched in the next two months.

DLF had in February this year said it was ready to launch a large CMBS of about Rs 3,600 crore in its SEZ business to further improve the quality of debt.

However, the company was waiting for the Securities Appellate Tribunal (SAT) judgement on the SEBI's order banning DLF from accessing the capital market for three years.

In March, SAT had passed a 'majority order', quashing the three-year market ban imposed on the realty giant by the SEBI.

Last year, the company had launched the country's first CMBS. It raised Rs 900 crore in two rounds of CMBS against two shopping malls in the national capital.

DLF's net debt stood at Rs 20,336 crore as on December 31, 2014, of which about Rs 14,000 crore pertains to rental arm.

Asked about the company's plan to list the Real Estate Investment Trusts (REITs) to monetise its commercial assets, Tyagi said: "This fiscal we do want to float our first REIT, subject to receiving requisite approvals."

He said the REITs have become viable now following the government's clarification that the minimum alternate tax (MAT) would be applicable only when there is actual transfer of units of such trusts.

"Although dividend distribution tax (DDT) will continue to be an irritant, some players will be looking at REITs. We can see 4-5 pilot REITs being launched this fiscal," Tyagi said.

The REITs would help in unlocking value of completed and leased assets and the fund could be used for capex and debt reduction, he added.

On plans to raise Rs 3,000 crore through private equity (PE) on project level, DLF CFO said, "the discussions are still undergoing with some private equity players". He did not give any timeline for closure of the PE deals.

The company is looking to divest around 50 per cent stake each in four new housing projects to PE firms. It is raising funds through PE routes to boost its cash flow as housing sales have been sluggish since last few years.

Asked about market conditions, Tyagi said the housing sales are still slow but commercial leasing have picked up.

DLF has a land bank of about 300 million sq ft, of which about 50 million sq ft is under construction. Its share price went up 1.25 per cent to Rs 138 apiece on the BSE. The market cap stands at Rs 24,644 crore.