DLF eyes Rs2,700 crore asset sales in the next 18 months

DLF, the country’s largest realtor, is looking at raising Rs 2,700 crore through asset sales in the next 12-18 months, of which Rs 300 crore is expected to come soon, as the  firm is in an advanced stage of discussions for it.

DLF plans to encash its land at Dwarka in Delhi for Rs 800 crore, at Tidco in Tamil Nadu for Rs 900 crore and in other places for Rs 700 crore.

In the last quarter it received Rs 566 crore through divestment of its non-core assets and for the whole year it unlocked Rs 1,800 crore.

On its DLF Assets Ltd (DAL), the company said it will take a call on its listing in another 6-9 months, which will be a pure real estate investment trust play than a business trust.

DLF achieved sales of 12.5 million square feet (msf) against the target of 14-15 msf for the year at an average selling price of Rs 5,699 per sq ft and a total sale value of Rs 7,150 crore.

It added 21 msf to construction during the year taking the total to 56 msf.

At present, it has 56 msf under construction and plans to launch 15-18 msf this year. It includes a luxury portfolio of 1-1.5 msf in NTC mill compound in Lower Parel, Mumbai, and Delhi, 2-3 msf of high-end city centre projects in Chennai, Kochi and Gurgaon and 12-14 msf of mid-income and value housing projects in Gurgaon, Hyderabad, Kochi and Chandigarh.

In the commercial office space segment it plans to lease close to 3-4 msf.

Saurabh Chawla, executive director, finance, DLF, said in a conference call on Saturday, “The momentum for office space leasing has not picked up. We expect it to pick up in the next 2-3 quarters when enquiries will fructify into leasing.”

DLF at present isn’t seeing rental leasing of 0.5-1 msft, last seen during the good times of 2007-2008. The expected consolidated rental income from DAL and CARAF for FY11 is Rs 500 crore. In retail, the company is focusing on leasing 100% of its capacity and waiting for policy initiatives from the government for organised retail.

At present its debt to equity ratio is 0.53% which is expected to go up to 0.75% by June end on account of the buying of the SC Asia stake in DAL.  DLF has a mandatory repayment of Rs 2,600 crore this year. Average cost of debt declined from 11.9% in December 2008 to 10.5% in March 2010. 

The parent company raised Rs 3,788 crore in the last quarter to pay SC Asia. It plans to retire Rs 4,000-5,000 crore from the gross debt of Rs 21,500 crore by the end of the year, of which half would come from the asset sale.