DLF Ltd, the country’s biggest listed developer, has pushed to next year the deadline for the proposed stake sale in its rental arm by promoter group companies to institutional investors.
KP Singh and family, who control DLF Ltd, had planned to sell a 40 per cent stake in the group's commercial rental properties by March this year. This has been postponed to March 18, 2017, the company said in a stock market disclosure. It didn’t specify any reason for extending the deadline.
The terms and conditions of the stake sale remain the same.
The company’s rental business is housed under DLF Cyber City Developers Ltd (DCCDL), in which debt-laden DLF owns a 60 per cent stake while the promoter group holds the remaining. DLF is looking at a valuation of Rs 12,000-14,000 crore for the 40 per cent stake. It aims to put back proceeds from the stake sale into the parent company to cut debt.
The realty major has tried a slew of measures including divestment of non-core assets and land parcels but its debt has remained uncomfortably high. It is also looking to tie up with private equity firms for residential developments to lower debt.
VCCirlce had reported in November that a large group of investors, including new and existing financial partners of DLF, was in the race to pick up a share in the stake.
Blackstone, Singapore sovereign wealth fund GIC and Canadian pension fund CPPIB are in the race for what could be the biggest realty transaction in recent times in India.
Separately, in an investor presentation, DLF said its bankers and advisors have completed substantial work regarding the stake sale. It said that many prospective institutional investors, which include sovereign funds, pension funds and private equity firms, have evinced interest to participate in the bidding process.
“The culmination of the transaction (rental stake divestment) will be an important step to create two ‘pure plays’ – residential business with zero debt and an independent commercial business in partnership of long term institutional investors,” the company said.
Meanwhile, the company clocked consolidated revenue of Rs 2,981 crore for the third quarter of 2015-16 compared with Rs 2,080 crore a year earlier. Net profit rose to Rs 164 crore from Rs 132 crore. The numbers reflect a revision in construction budgets, it said.
The biggest contributor to its revenue was a deal with GIC for Rs 1,990 crore.
This also helped the developer bring down its debt to Rs 21,411 crore at end of the October-December period, down by Rs 1,109 crore from the previous quarter. The company’s debt has fallen after a long gap. DCCDL accounts for about Rs 16,200 crore of the total debt.
According to its investor presentation, residential markets have remained weak in the past 18 months in most markets where DLF operates. The company would focus on executing projects to create finished unlaunched stock and delivery of legacy projects, it said.
In the commercial segment, however, demand conditions are stable although there is an uptick on rentals as forecasted supply of office space has not crystalized. The company has no inventory left for leasing in Gurgaon’s Cybercity area and has launched an office project measuring 1.6 million sq ft in the city, it said.
During the quarter, it sold 0.21 million sq ft area worth Rs 405 crore compared with 0.24 million sq ft worth Rs 575 crore in the preceding quarter. On the leasing part, it saw 0.49 million sq ft leased out compared with 0.08 million sq ft in the previous quarter.