DLF to sell assets to survive slump
The Economic Times, February 2, 2009, page 6
Realtor To Stop Asset Sale To Promoter Group Firm As Demand For Leased Office Space Shrinks
Sanjeev Choudhary NEW DELHI
LIKE its smaller rival Unitech, India’s largest property firm DLF said it will sell its assets as it battles a slump in the real estate sector that has brought down its profit by 69% and sales by 59%. DLF will also stop sale of its assets to promoter group company DLF Assets (DAL) in the short term as demand for leased office space shrinks sharply and receivables from DAL rise dramatically.
The company said in a statement announcing its December quarter earnings that it will “focus on unlocking ‘non-strategic’ assets with no medium-term utility.” It didn’t describe what it meant by “non-strategic assets”. DLF said it would focus on liquidity and cash flows rather than growth in short to medium term.
“Our focus will be on the mid-income homes and commercial complexes, with deferment of high-margin launches in luxury homes and retail space,” DLF vice-chairman Rajiv Singh said in a statement.
The company said that ‘due to a sharp reduction in the demand for leased office space’ the balance delivery in DAL will be ‘substantially delayed’ and accordingly the revenues accruing to DLF from the sale of assets to DAL will ‘not be significant at least for the next several quarters.’ DLF is supposed to deliver 19 million sqft of total space to DAL. More than half of this space has already been delivered to DAL. The decision to delay delivery to DAL may also be partly on account of the rising receivables from DAL to DLF for earlier purchases and DAL’s inability to raise fresh funds. The receivables from DAL at the end of September quarter was Rs 4,800 crore. The company didn’t clarify by how much receivables have gone up in December quarter. DAL hasn’t been able to raise fresh fund in December quarter to pay back to DLF, but the realty firm said, “DAL has received a serious level of interest from large private equity investors and DAL expects to close this transaction soon, possibly within this financial year itself.”
The company booked a total of 1.74 million sqft, including sale and leases in December quarter. This included 0.70 million sqft of space in homes. Compared to this, DLF had sold 3.12 million sqft of space, including 2.79 million sqft of homes and 0.33 million sqft of commercial complexes, in the September quarter. The company said extremely adverse market sentiment affected both topline and bottomline. “Where is the demand? Demand has completely evaporated across segments,” DLF CFO Ramesh Sanka said.
The Economic Times, February 2, 2009, page 6
Realtor To Stop Asset Sale To Promoter Group Firm As Demand For Leased Office Space Shrinks
Sanjeev Choudhary NEW DELHI
LIKE its smaller rival Unitech, India’s largest property firm DLF said it will sell its assets as it battles a slump in the real estate sector that has brought down its profit by 69% and sales by 59%. DLF will also stop sale of its assets to promoter group company DLF Assets (DAL) in the short term as demand for leased office space shrinks sharply and receivables from DAL rise dramatically.
The company said in a statement announcing its December quarter earnings that it will “focus on unlocking ‘non-strategic’ assets with no medium-term utility.” It didn’t describe what it meant by “non-strategic assets”. DLF said it would focus on liquidity and cash flows rather than growth in short to medium term.
“Our focus will be on the mid-income homes and commercial complexes, with deferment of high-margin launches in luxury homes and retail space,” DLF vice-chairman Rajiv Singh said in a statement.
The company said that ‘due to a sharp reduction in the demand for leased office space’ the balance delivery in DAL will be ‘substantially delayed’ and accordingly the revenues accruing to DLF from the sale of assets to DAL will ‘not be significant at least for the next several quarters.’ DLF is supposed to deliver 19 million sqft of total space to DAL. More than half of this space has already been delivered to DAL. The decision to delay delivery to DAL may also be partly on account of the rising receivables from DAL to DLF for earlier purchases and DAL’s inability to raise fresh funds. The receivables from DAL at the end of September quarter was Rs 4,800 crore. The company didn’t clarify by how much receivables have gone up in December quarter. DAL hasn’t been able to raise fresh fund in December quarter to pay back to DLF, but the realty firm said, “DAL has received a serious level of interest from large private equity investors and DAL expects to close this transaction soon, possibly within this financial year itself.”
The company booked a total of 1.74 million sqft, including sale and leases in December quarter. This included 0.70 million sqft of space in homes. Compared to this, DLF had sold 3.12 million sqft of space, including 2.79 million sqft of homes and 0.33 million sqft of commercial complexes, in the September quarter. The company said extremely adverse market sentiment affected both topline and bottomline. “Where is the demand? Demand has completely evaporated across segments,” DLF CFO Ramesh Sanka said.
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