DLF a step closer to DAL Reit

DLF Ltd, India’s largest real estate developer by market capitalisation, has taken another step towards listing DLF Assets Ltd (DAL) in Singapore.

On Saturday, it announced that subsidiary Caraf Builders increased its stake in DAL from 50% to 91.9% by acquiring 245.2 million shares from private equity firm SC Asia for Rs 3,085 crore, or $694 million.

SC Asia had invested $650 million in DAL through two tranches in May and November 2008.

The move paves the way for DAL to be listed as a real estate investment trust in Singapore.

A company official said after the announcement of stake consolidation that DLF is preparing for a listing of DAL in the “medium term”, specifically “within 3-6 months depending on market situation.”

“We had Rs 2,500 crore cash in hand and Rs 1,800 crore from accruals and that was used to pay SC Asia. Now with more than 90% economic interest in DAL, we can take it public,” a senior
DLF official, who did not wish to be named, told DNA Money.
Post the deal, SC Asia holds 4.59 % stake in DAL, while DE Shaw & Co, another investor, has 3.51%.

Caraf, the holding company for DAL, has four rent-yielding properties in Gurgaon, located south of New Delhi, Kolkata and Chandigarh, the statement said. DAL also owns four special economic zones.

Caraf has recently been merged into DLF, and is the holding company of DAL, which is owned by DLF promoter K P Singh and others.

DAL was supposed to be listed in Singapore in April 2008, but the global meltdown that followed meant the float was deferred.
The combine entity has a rent yielding portfolio of 16 million square feet and provides a steady income stream to DLF.

An analyst covering DLF said the integration should yield long-term dividends.

Caraf, the holding company for DAL, owns four rent-yielding properties — two in Gurgaon, one each in Kolkata and Chandigarh, with total leased area of 3.3 million square feet.
DAL also owns four special economic zones (SEZ) — two in Gurgaon and one each in Hyderabad and Chennai with a total leased area of 6.4 million square feet.

The combined entity has eight rental assets with leased area of 9.7 million square feet, current assets of Rs 2,200 crore and debt of Rs 2,500 crore.

DLF had earlier said that it is expecting total rental income of Rs 1,900 crore by end of 2010.

The rentals in Gurgaon are about Rs 50-55 per sq ft; Chennai is at Rs 45-48 per sq ft and Hyderabad at Rs 40 a sq ft which is expected to go up in the coming quarters.

Last year, DLF promoters along with their families and private firms, sold 9.9% stake in DLF to raise about Rs 3,750 crore, or $760 million to provide an exit route to DE Shaw, another investor in DAL.