DLF eyes 900 cr from plot sales

DLF eyes 900 cr from plot sales
The Economic Times, April 8, 2009, Page 1

ITC, Accor, Hyatt, Park Hotels & Duet Group In Race For 8-9 Hotel Plots

Sanjeev Choudhary NEW DELHI

INDIA’S largest real estate developer, DLF, expects to raise around Rs 900 crore in the next three months by selling at least eight hotel plots across the country, a senior company executive said.

The company is talking to several hotel companies, including ITC, Accor, Hyatt and Park Hotels, and buyout fund Duet Group for sale of these plots, he added, requesting anonymity.

The plots put on the block are located in Mumbai, Kolkata, Bangalore, Gurgaon, Baroda, Lucknow, Kasauli (Himachal Pradesh) and Sikkim.

“We are in advanced stages of negotiations with several hotel chains to sell 8-9 land parcels that were marked for hotel projects. We have necessary government approvals in place, but don’t intend to build hotels there immediately,” he said.

DLF is selling these plots to raise funds for other hotel projects that are due to begin construction soon. The company may close 4-5 deals in a month and the balance by June-end, he added.

Real estate consultants say there are a large number of incomplete hotel projects up for sale across the country as realty companies, faced with cash crunch, are losing interest in these capital-intensive projects. The official spokesman at DLF declined to comment on the hotel plot negotiations. “We do not comment on market speculation,” he said. Hotel business not attractive any more.

WHILE announcing December 2008 quarter earnings, DLF vice-chairman Rajiv Singh had said the company wanted to raise around Rs 2,000 crore by selling its assets, but didn’t mention hotel plots specifically. DLF had nursed ambitious plans to build over 25,000 hotel rooms in more than 40 cities and tourist destinations across India. But the global downturn made capital scarce and expensive, forcing it to slow down plans.

The terror strikes in India and belt-tightening overseas further hit visitor arrivals. Lower occupancy forced hotels to cut room rates, making the business less attractive. DLF’s joint venture with international hotel chain Hilton too was reworked after the latter was taken over by the world’s largest buyout fund, Blackstone Group, globally.

The joint venture company is now expected to build only four hotels against the much larger number planned earlier. Exact numbers were never disclosed. The joint venture company will build hotels in Kolkata, Chennai, Mysore and Trivandrum. DLF has obtained government clearances for all hotels except in Mysore, but hasn’t achieved financial closure for any of the projects. Two of DLF’s hotels are ready and likely to open by the monthend in south Delhi. Several real estate developers, which entered the hotel business in the past few years, are now looking for an exit or trying to moderate their ambition. Delhi-based Parsvnath Developers has put its four hotel projects on the block while Unitech has sold one hotel in Gurgaon and looking for buyers for the rest.