DLF to sell 30-acre land for Rs 550 crore to further reduce debt

22-Jul-2014    |    Source:    http://economictimes.indiatimes.com/

NEW DELHI: DLF, India's largest real estate developer, is selling a 30-acre land parcel in Hyderabad's Raidurg area to local builder My Home Group for Rs 550 crore, two people with knowledge of the development said. 

The transaction will be completed in the next one month and DLF will use the money to reduce its debt further, one of the persons said. DLF has pared its debt toRs 18,500 crore from over Rs 23,000 crore a few years ago, but it hopes to bring this down further to Rs 17,500 crore by the end of the current fiscal. 

A spokesman for DLF said the company did not comment on market speculation. A spokesman for My Home Group said the company did not want to respond to any market rumour on the matter. 

The Delhi-based developer had bought the land parcel from the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) in 2008 in the corporation's Game Park project that was launched two years earlier. 

About 40% of the 350-acre IT Park had been allocated for activities other than IT that included housing, hotels, commercial office buildings and malls. Along with DLF, some other developers including Puravankara Projects, My Home Industries, Salarpuria Sattva and ITCBSE 0.80 % had bought land in this part of the Game Park. 

DLF was unable to develop the land because it fell under the Archaeological Survey of India's heritage zone where no construction was allowed. The land was dotted with several large rocks that were meant to be preserved, so no construction was allowed near them. 

Considering this fact, the APIIC gave DLF the option of moving to another area within the Game Park and later allotted a 30-acre parcel close by, outside the heritage zone, said Jayesh Ranjan, managing director of Telangana State Industrial Infrastructure Corporation, which was created after the state was bifurcated into Seemandhra and Telangana recently. Ranjan was earlier the managing director of consolidated APIIC. 

DLF has been on a drive to sell its non-core assets to reduce debt. In 2013-14, it achieved non-core sales ofRs 5,930 crore by selling its wind energy business, insurance business and Aman Resorts, besides getting a refund from the government for its Dwarka project and the Institutional Placement Programme (IIP). In 2012, it had sold a 17-acre land parcel in central Mumbai's Lower Parel area to Lodha Group forRs 2,727 crore. 

The developer recently raisedRs 900 crore by completing the country's first commercial mortgage-backed security or CMBS issue, privately placing its luxury mall DLF Emporio for Rs 525 crore and subsequently raising another Rs 375 crore by issuing CMBS against another mall in Delhi. 

It has now embarked on a plan to raise Rs 3,000-4,000 crore by issuing CMBS against some of its rented office buildings across the country over the next two years in a bid to move a larger proportion of its debt on rental assets to CMBS, thereby also reducing its reliance on the banking system. 

DLF has about 25 million sq ft of leased office space spread across Gurgaon, Hyderabad, Kolkata, Chandigarh and Chennai, which generates a rental of about Rs 1,950 crore every year and supports Rs 12,000 crore of the company's debt. 




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