DLF raises Rs 1,000 cr through land sales

DLF raises Rs 1,000 cr through land sales
The Economic Times, July 3, 2009, Page 18

Sanjeev Choudhary NEW DELHI

DLF has raised around Rs 1,000 crore through sale of land parcels across four cities in the past 4-5 weeks and is on course to close more such deals worth another Rs 500 crore in the coming weeks, two company executives said.

This is in keeping with the country’s largest real estate developer’s announced objective of raising Rs 5,500 crore through asset sale and use these funds to halve its Rs 14,000 crore debt by the end of this fiscal.

DLF has sold off land parcels in Mumbai, Baroda, Gangtok and NCR. The plots in Prabhadevi, Mumbai and Baroda were not marked for any specific purpose, as the company hadn’t paid government fees and obtained licences for any specific use. DLF has sold a hotel project in Delhi and another in Gangtok.

Chennai-based investor C Sivasankaran bought DLF’s 66% rights in the Prabhadevi plot for Rs 310 crore, while another Delhi-based high net worth individual bought a hotel project in Delhi. The details of other transactions were not available.

A slump in Indian property market has forced several developers to sell assets to improve cash flow. A dramatic decline in sales of homes, offices and shops coupled with tight credit situation between September and March forced many realty firms to put their assets on sale as they found it difficult to repay debt and continue with the execution of their ongoing projects. DLF’s smaller rival Unitech sold off its hotel in Gurgaon and an office building in Saket in the past few months. But selling assets, especially land hasn’t been easy for any developer as there were hardly any buyer for land. DLF though has successfully closed multiple transactions of late.

The DLF spokesman declined to comment, but two senior executives at the firm confirmed the raising of Rs 1,000 crore through asset sale in the last. They also said that DLF has finalised a buyer for its land parcel in Andheri, Mumbai, and is close to signing the deal. Similarly, the company is in final stages of negotiations with private equity fund Duet group to sell its hotel plot in Gurgaon for Rs 110 crore.

The company has put on the block hotel plots at many other locations including Lucknow, Kasauli, Goa, Mumbai and NCR, which the company expects to fetch at least Rs 500 crore together.

DLF, which is in a deleveraging mode, plan to use the newly-raised fund to repay debt. Much of what has been raised so far and what is likely to come in the future through asset sale will go towards reducing debt. DLF vicechairman Rajiv Singh had earlier said that the company intended to halve its Rs 14,000 crore debt by March 2010.