DLF to form two REIT platforms to monetise assets

Delhi/NCR
India's largest real estate firm DLF said it will establish its first real estate investment trust (REIT) in the first six months of 2015-16.

"The groundwork on REITs is underway. Many strategic and financial investors for REITs are in touch with us," Ashok Tyagi, group CFO at DLF, said in a conference call with analysts on February 10. The company said in a presentation that it plans to form two REIT platforms, one for office and another for retail, to tactically monetise its nearly 30 million sq ft commercial assets to increase cash flows and reduce net debt.

There are expectations that the coming Budget will provide clarity on tax-related issues for REITs. Tyagi, however, said even if the Budget doesn't provide such clarity, DLF could still go ahead with the REIT plan on some of its assets.

The company also said it plans to keep its net debt at the current level through "tactical divestments or JV's with strategic or financial investors of certain projects. Current value of deals in pipeline, at various stages of negotiations, due diligence, documentation exceeds Rs 3,000 crore"

DLF's net debt rose by around Rs 400 crore to Rs 20,336 crore as on December 31. The current net debt attributable to the company's development arm, DevCo, is Rs 6,350 crore and that to the rental business,RentCo, is about Rs 14,000 crore.

On the residential sales front, Saurabh Chawla, DLF's executive director for finance, said demand is still muted but there are early signs of it coming back. "We have done fresh bookings worth Rs 800 crore in Gurgaon's DLF phase 5 in the last two months," he said. Commercial office space leasing, however, has done well and DLF is attribnow looking to deploy its capex soon to build leasable space over the next 18-24 months. It is expected to launch a new building in the Cybercity area in Gurgaon in the next few months.

Over the last two days, the Competition Commission of India has ordered two inquiries into complaints against DLF for alleged abuse of dominant position in Gurgaon, involving projects Regal Gardens and Skycourt.

"CCI has not passed a judgement but only ordered an inquiry in the Regal matter because they felt that the causes of dominance and the agreement, which they have opined upon earlier, were prima facie valid," Tyagi told analysts.

Source: http://content.magicbricks.com/industry-news/delhi-ncr-real-estate-news/dlf-to-form-two-reit-platforms-to-monetise-assets/80415.html