DLF sells Akruti JV stake for Rs 200 cr

DLF sells Akruti JV stake for Rs 200 cr
The Economic Times, July 9, 2009, Page 6

Sanjeev Choudhary NEW DELHI

INDIA’S largest real estate developer DLF has sold its stake in a 50:50 joint venture with Mumbai-based Akruti City for developing a commercial project in Mumbai to a US-based real estate fund for over Rs 200 crore, two senior executives at DLF said, asking not to be named.

The JV firm is developing two office buildings spread over 9 million sqft area at Andheri, Mumbai. These two buildings are part of a larger slum rehabiliation project being developed by Akruti City.

DLF had picked stake in the project over two years ago with the strategy of spreading its footprint across the country. DLF exited the project as part of its asset sale programme to raise Rs 5,500 crore by the end of this fiscal.

As part of stake sale in Andheri project, DLF will receive Rs 200 crore plus the proportionate cost of construction done so far in the project. Around 20% of the construction work is complete, which may fetch DLF another Rs 20-25 crore, a DLF executive said. DLF has already received the token amount for the deal.

The identity of the real estate fund that bought DLF’s stake couldn’t be immediately ascertained, but a person familiar with the development said, the fund already has some investments in the Indian real estate sector.

Besides existing the Andheri project, DLF has in the past two months raised around Rs 1,000 crore through asset sale across different cities in the country. It recently sold off its 66% rights in a land parcel in Prabhadevi, Mumbai for Rs 310 crore to Chennai-based investor C Sivasankaran. It also sold off land parcels meant for hotel and commercial projects in Baroda, Gangtok and NCR.

The company expects to raise additional funds through sale of hotel plots in Lucknow, Kasauli, Goa, Mumbai and NCR. DLF has already exited from township projects in Bidadi in Karnataka and Dankuni in West Bengal. It is also in the process of selling its wind power business.

The fund raising through asset sale will go towards reducing the company’s debt. DLF plans to raise around Rs 10,000 crore through asset sale in the next three years and halve its outstanding debt of Rs 14,000 crore by the end of the current fiscal. A downturn in the Indian real estate sector, which dramatically reduced demand for homes, offices and shops, led to a cash crunch at most realty companies forcing them to liquidate assets to generate cash.

With a majority of real estate companies facing cash crunch, it was difficult to find buyers for realty assets. But now with private equity funds and some high networth individuals becoming active again in the property market, deals have picked up.

PICK ‘N’ DROP

DLF had picked stake in the project over two years ago to spread its footprint across the country

It exited the project as part of its asset sale programme to raise Rs 5,500 crore by the end of this fiscal

As part of stake sale in Andheri project, DLF will receive Rs 200 crore, plus the proportionate cost of construction done so far

DLF has in the past two months raised around Rs 1,000 crore through asset sale across different cities