DLF says no to sale of core assets

DLF says no to sale of core assets
The Economic Times, June 19, 2009, Page 15

Co To Sell Only Non-Core Assets, Pulls Back Prime Properties As Lending To Real Estate Cos Starts To Ease

Ravi Teja Sharma NEW DELHI

INDIA’S largest real estate company, DLF, has decided against selling core assets—residential, industrial and commercial plots—which it had put on the block.

The company will now sell only the hotel plots, which are non-core to its business. DLF executive director YK Tyagi told ET that the company has pulled back these assets from the market over the last 2-3 weeks, considering that bank lending to the real estate sector has started to ease. Last month, the company’s promoters had offloaded 9.9% shareholding to raise Rs 3,980 crore, which has put the company in a comfortable position.

A few prime properties in Gurgaon’s Cybercity and Udyog Vihar areas have been on the block for sometime now have been pulled back. DLF recently told ET that it planned to raise Rs 10,000 crore by selling land parcels, treasury investments and real estate projects in the next 2-3 years.

“The decision to pull back these core assets from the market was taken considering the fact that banks have become more liberal with lending to real estate companies,” said Mr Tyagi. He said that after the recent stake sale by the promoters of the company, DLF is in a comfortable position.

DLF promoters had sold 9.9% stake last month to raise Rs 3,980 crore, which has put the company in a comfortable position. Capital Group picked up close to 5% in DLF, while HSBC, GIC and Fidelity bought smaller stakes. Following the open market transaction, the promoter group now holds 78.6% stake in DLF.

Mr Tyagi added that the company will continue to sell its non-core assets, including hotel plots and its wind power business which would help them reduce their debt by half. DLF’s debt stands at around Rs 14,000 crore. “We expect to sell all of the hotel plots by the end of the year,” he said. The company had said earlier that they do not want to exit the entire hotel business.

While looking at hotel properties and plots just as an investment, DLF would like to retain the Aman brand. DLF has a number of hotel plots located in Mumbai, Kolkata, Bangalore, Gurgaon, Baroda, Lucknow, Kasauli (Himachal Pradesh) and Sikkim among others. According to sources, DLF has managed to sell hotel plots in Sikkim and Baroda.

A number of core assets—commercial, residential, industrial plots—were on sale by the developer, some of which it managed to sell over the last few months. The company recently sold its 66% stake in Hindoostan Spinning and Weaving Mill in central Mumbai for Rs 310 crore.