Home >companies >DLF plans expansion of rental biz post stake sale

Mumbai:DLF Ltd, India’s largest real estate firm by market value, is ramping up its rental portfolio with plans to build nearly 10 million sq. ft commercial real estate in the next 5-7 years, post its stake sale in its rental arm to Singapore sovereign wealth fund GIC Pte Ltd last year to repay its debt.

The company, which has an outstanding debt of around Rs6,265 crore as of March end, said it is in line to achieve its target to be a “zero-debt firm" by end of the next financial year mainly through infusion of capital from promoters and issues of shares through qualified institutional placement (QIP). In the December quarter, the promoters have infused around Rs7,100 crore to repay debt. By the end of this year, promotors will further infuse Rs2,250 crore, Saurabh Chawla, group chief financial officer, DLF, said in a analyst call on Tuesday.

Besides, in December last year, DLF had concluded the sale of 33.34% stake in its rental arm to GIC for around Rs8,900 crore. The money has also been used to reduce its debt. Following the stake sale, the joint venture with GIC would operate as an independent entity and the Rs16,000 crore debt has been carved out from DLF and moved to the rental platform.

DLF, which recently won a bid to acquire around 11.76 acre of Haryana State Industrial & Infrastructure Development Corporation ( HSIIDC) land at Gurugram, is looking for a strategic equity partner to develop around 2 million sq. ft in the next three to four years. “At this stage, we are in the process of paying for the land and also in parallel seeking for an equity partner. This land parcel was very strategic for us and hence we could not ignore," Chawla said, adding that the firm would not be looking to buy prime land in the near future.

Apart from the upcoming 5 million sq. ft Information Technology park in Chennai, the company is also developing 2 million sq. ft of commercial office space in Gurugram, DLF said in its investor presentation.

Chawla said while DLF Cyber City Developers Ltd (DCCDL) would remain purely rental and investment property firm, DLF would be a development company. “Our intention is to develop and sell and not develop and lease, whereas DCCDL would deal only in develop and lease," he said. On a long-term basis, the company expects 14-15 annual growth on an average. “As we induct more assets into this entity, this number would keep increasing," he said.

Post the stake sale, the company said its surplus operating cash flows shall be available for business activities because of reduced construction spends as most projects have received occupancy certificates and also because of the increased momentum from new bookings of completed apartments.

Besides, the DLF-GIC platform is expected to generate substantial cash flow for new capex and dividend flows to both the shareholders—DLF and GIC Singapore, DLF said.

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