DLF to settle Rs 8,500 cr payable to JV with GIC by 2020

Realty major DLF will settle Rs 8,500 crore payable to its joint venture with Singapore's sovereign wealth fund GIC by 2020, mainly by transferring certain assets, the company said.

In the joint venture firm DLF Cyber City Developers Ltd (DCCDL), DLF has 66.66 per cent stake while GIC has 33.34 per cent shareholding. DCCDL currently holds about 27 million sq ft of rent-yielding commercial assets, largely in Gurugram, with annual rental income of about Rs 2,400 crore.

The JV was formed in December 2017 when DLF promoters sold entire 40 per cent stake in DCCDL for nearly Rs 12,000 crore. 

This deal included sale of 33.34 per cent stake in DCCDL to GIC for about Rs 9,000 crore and buyback of remaining shares worth about Rs 3,000 crore by DCCDL.

In an analyst presentation, DLF said that about Rs 8,500 crore amount is inter-company payable by DLF Group to DCCDL.

"It is anticipated that inter-company payables shall be settled by 2020, largely by transfer of certain identified assets of DLF," it added.

DLF plans to settle this amount through sale of certain rent-yielding assets and land parcels earmarked for commercial use.

In February this year, DLF's group CFO Saurabh Chawla had said the company would like to transfer all commercial assets, including land parcels, to the JV but certain assets cannot be transferred due to regulatory norms.

DLF has completed rent-yielding assets in Delhi and has commercial land parcels in Gurugram and Chennai that can be transferred to DCCDL, Chawla had said.

In the presentation, DLF said that DCCDL would "act as 'Business Trust' ? not only will it build its own investment properties (about 25 million sq ft potential embedded in the JV) but would also have the ability to purchase investment properties, at FMV (fair market value), being developed by DLF or third parties."

DLF also reported the financial results of the JV firm DCCDL, which posted a net profit of Rs 363 crore over an income of Rs 1,227 crore during the first quarter of this fiscal.

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The JV currently has a net debt of Rs 16,162 crore, of which Rs 14,570 crore loans are through lease rental discounting (LRD) against its rental receipts from leased commercial properties. The average maturity of this LRD loan is 7.5 years with average coupon rate of 8.72 per cent. Nearly Rs 890 crore loan is through CMBS (commercial mortgage backed securities) with a coupon rate of 10.9 per cent.

The JV is expected to generate substantial cash flow for new capex, net debt reduction and dividend flows to both the shareholders, the presentation said.

DCCDL group currently owns and operates a pan-India portfolio about 27 million sq ft and the portfolio would more than double in the next 10 years, it added.