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DLF, Blackstone rejig JV to develop projects separately

20 July, 2016

DLF Ltd, India’s biggest developer by market value, said on Wednesday it has restructured a joint venture with Ridgewood Holdings Ltd that was to develop seven residential projects across Bangalore, Chennai, Kochi and Indore. 

Ridgewood was initially part of US-based investment bank Merrill Lynch but is now controlled by Blackstone Group.

DLF had formed the joint venture in 2007 when Merrill Lynch invested Rs 1,481 crore to pick up a 49% stake across seven residential projects. The projects were to be developed in seven to eight years and the move was in sync with DLF’s 10-year development horizon, the developer had said at the time.

However, the global financial crisis that erupted in 2008 changed the fortunes of Merrill Lynch. The US firm was acquired by Bank of America in 2008. Bank of America, in turn, agreed to give the rights to manage its Merrill Lynch Asian real estate assets to Blackstone in 2010 and act as the new general partner for Merrill Lynch Asian Real Estate Opportunity Fund.

DLF said the decision to realign the joint venture’s shareholding arrangement is aimed at focusing on the development of various projects.

As part of the restructuring, Ridgewood will take 100% control of certain projects while DLF will take full control of other projects, said Saurabh Chawla, senior executive director of finance at DLF. Ridgewood will take control of projects in Bengaluru, a part of a project in Chennai and about 2.5 million sq ft in Chennai which is yet to be launched, Chawla told CNBC TV18.

Blackstone separately has a huge presence in India in the commercial real estate market. It has an office space portfolio of over 30 million sq ft across India, besides joint ventures and investments in residential properties. The investment giant has also started to add retail assets in its portfolio as it prepares for a listing through real estate investment trusts.  

The development comes at a time when DLF is in the midst of selling the 40% stake of its promoter group–KP Singh and family–in its rental arm. The proceeds from the stake sale are to be ploughed back into the parent arm to slash debt that hovers around Rs 22,000 crore. 

The developer had earlier tried to mark its presence across India but has lately backtracked and is now focusing on its core market of Delhi-NCR. Given the slowdown in the real estate market, especially in NCR, it has shied away from launching new residential projects and is trying to finish the existing ones.

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DLF, Blackstone rejig JV to develop projects separately

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