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New Delhi/Chennai, Dec. 28:

Troubles mounted for DLF Ltd, with credit rating agency Crisil downgrading a slew of India's largest realtor's debt programmes and terming the outlook “negative”.
The downgrade might force DLF to accelerate the sell-off of its land banks and other assets in order to deleverage its reduce pile.
In fact, DLF today announced that the company and its partner have sold an IT SEZ in Pune to private equity firm Blackstone for Rs 810 crore, as part of an ongoing programme to divest ‘non-core' assets.
Wednesday's sale is the second such deal this month. DLF recently also announced the receipt of proceeds from divestment of Noida IT Park. DLF, along with its joint venture partner in Galaxy Mercantile Ltd (the owner of IT park in Noida), received Rs 200 crore towards the first tranche of infusion of capital from IDFC. In another transaction, the company also sold a 28-acre plot in Gurgaon to developer M3M India for Rs 440 crore.
But Crisil said it believed that “DLF's debt levels will remain high and that the weak business environment will result in moderate operating cash flows, leading to weak debt protection metrics.”
“DLF's debt levels will remain higher than Crisil's earlier expectations because of delay in divestment of non-core assets,” Crisil added.
It further said that while it had initially expected DLF's debt levels to decline, supported by divestments of non-core assets of Rs 2,500 crore in FY12, DLF has mustered divestment proceeds of only Rs 400 crore in the first six months of the fiscal.
Mr Param Desai, an analyst at Nirmal Bang Institutional Equities Pvt. Ltd, a Mumbai-based brokerage, said that while DLF had made fair progress on the non-core asset sales front, it was the absence of new launches which was holding back the debt reduction plans. “Unless the company comes up with new launches, the debt will not go down and hence re-rating will not happen,” he said.
As on September 2011, DLF's total loans stood at a staggering Rs 25,450 crore. In fact, DLF's mounting debt has been a key monitoring metric for investors and analysts over the last few years.
In an analyst presentation recently, the company had said it was eyeing Rs 6,000-7,000 crore over the next 2-3 years from divestment on non-core assets. The proceeds, it had said, would be utilised to cut debt.
Responding to the downgrade note, the DLF's Group CFO, Mr Ashok Tyagi, said that some quarterly deviations notwithstanding, the company was “very focused” on its divestment target. “I am confident that with upcoming action on launches (in Mohali, Lucknow and Gurgaon), and the progress made on sale of non-core assets, this particular action by the rating agency (Crisil) will be corrected in the next few months,” he added.
Source:thehindubusinessline

MANOJa

Court dismisses DLF plea on SEBI order - The Economic Times

MANOJa

NEW DELHI: DLF, the country's biggest real estate firm, will sell a convention centre project in Delhi and its wind power business for about 1,800 crore early next fiscal, a senior company executive said.

The developer, which had a debt of over 22,000 crore at the end of September, is hoping to raise 3,000 crore in the current fiscal and about 3,500 crore in 2012-13 by selling its non-core businesses.

The executive, who did not want to be named, said DLF is close to finalising a joint venture agreement for the convention centre at Dwarka, in west Delhi, with a Japanese company that executes mega mall projects. The source declined to name the company but said DLF may hold a very small stake in the joint venture as part of a structured deal. The convention centre is expected to fetch DLF about 800 crore.

DLF had acquired a 35-acre plot from the Delhi Development Authority (DDA) in 2007 for 901 crore to ready a convention centre ahead of the 2010 Commonwealth Games. But the project, which was to include three hotels, commercial complexes and meeting areas, could not take off. Later, when the company wanted to exit the project and sought a refund from the DDA, the development body refused after seeking legal advise.

A top DDA official told ET, "DLF has sought permission to change the structure of the company that has got the land for the convention centre. They want to convert it into a consortium with a foreign partner, but DDA has not taken any decision yet."

The DLF executive said the developer has started negotiations with investors for its wind power business and expects to raise 1,000 crore through its sale.

A DLF spokesperson declined to comment when contacted by ET.








DLF to sell convention centre project, wind power business for Rs 1800 crore - The Economic Times

MANOJa

NEW DELHI: The country's biggest real estate company DLF has said its consolidated net profit for the third quarter fell 44.6% and cautioned that it would take another few quarters for it to regain full momentum.

Net profit in the quarter ended December 31, 2011 fell to Rs 258 crore from Rs 466 crore a year ago. Net sales for the company dropped to Rs 2,396 crore from Rs 2,594 crore.

The company said that its strategy "would require patience and caution to execute", despite its non-core divestment programme progressing well in the quarter. The company blamed high interest rates, commodity and labour cost inflation for the troubles."

Given these uncertainties, the company expects longer than anticipated time for its initiatives to take fruition. Due to the current macro environment, it may take a few more quarters for the company to regain full momentum," it said in a statement.

High cost of borrowing coupled with increasing cost of materials and labour has been pinching real estate companies for the last few quarters. Rising home loan rates have also forced home buyers to postpone their plans, aggravating the problems for real estate firms.

The company also said that revenue from its overseas subsidiary Silverlink Resorts, which runs the Aman Resorts chain of luxury hotels, was Rs 85.95 crore and net loss was Rs 36.8 crore.

In the October-December 2011 quarter, DLF has reported that it has got bookings for 3.3 million sq ft of space and has leased 0.42 million sq ft of space.

The only positive for the company during this quarter was in its endeavour to sell non-core assets. It managed to complete the sale of its Noida IT Park and its Pune IT SEZ. DLF realised Rs 1,200 crore from the sale of non-core assets in this quarter.

DLF has been trying to sell its non-core assets to reduce its mounting debt, which stood at Rs 22,519 crore at the end of September 2011. It is now in the process of selling its luxury hotel chain Aman Resorts.






DLF profit plunges 44.6% to Rs 258 crore - The Economic Times

MANOJa

New Delhi: Realty giant DLF's net debt fell by Rs 169 crore during the third quarter of this fiscal to Rs 22,758 crore and it expects to raise about Rs 6,000 crore by the end of next fiscal from sale of non-core assets.
In an analyst presentation, DLF said the company "remains focused on target divestments of Rs 6,000-7,000 crore... Proceeds are to be utilised primarily for debt reduction".

The company is targeting about Rs 6,000 crore by March 2013 from sale of non-core assets and said that three major deals are key to achieve this figure. In medium term, it expects to realise up to Rs 7,500 crore from such sales.

According to the presentation, the company is expecting Rs 2,000 crore from sale of hospitality venture Amanresorts and another Rs 1,000 crore from sale of wind energy business.

DLF expects to raise up to Rs 4,000 crore from sale of strategic projects in Mumbai and Chennai and another Rs 1,000 crore by offloading other projects that it did not name.

In the presentation, the company informed that it has raised Rs 1,620 crore in the first nine months of the current fiscal as against Rs 1,110 crore in the entire 2010-11.

DLF has decided to outsource construction activities to third parties to ensure timely completion of the projects.

"We will hand over 27-30 million sq ft in the next 2-3 years to third party contractors like L&T and Shapoorji," DLF Executive Director (Finance) Saurabh Chawla told analysts in a conference call yesterday.

The company has already handed over 9.5 million sq ft to third party contractors this fiscal, he had said.

"In the last 6-8 months, there has been some slowness in construction activities due to labour issues. With third party contractors coming in, the execution risk will go away. However, there will be some cost escalation," Chawla had said.

On Friday, DLF reported 45 per cent fall in consolidated net profit at Rs 258 crore in the third quarter of this fiscal on account of lower than expected sales. It had posted PAT of Rs 466 crore in the year-ago period.

The Q3 consolidated revenue also fell by 8 per cent to Rs 2,396 crore, from Rs 2,594 crore in the year-ago period.

"With macro environment continuing to remain unfavourable with high interest rates, commodity and labour cost inflation, the company's strategy shall require patience and caution to execute.

"Given these uncertainties, the company expects longer than anticipated time for its initiatives to take fruition," DLF had said.

Despite the company continuing its focus on launching plotted land developments, premium housing, divestment of non-core assets and reduction of debt, DLF may take few more quarters to regain full momentum, it had added.



DLF expects to raise up to Rs 4,000 cr

MANOJa

NEW DELHI: India's biggest real estate firm DLF is close to selling two 25-acre plots of land in Noida to Bharti Realty, the realty arm of Bharti Enterprises, for 250 crore. The two plots of land in sector-144 of Noida have permissions to build IT parks under the IT park scheme of Noida and the buyer can build close to 2.5-3 million sq ft of office space on each of the two plots, said two persons close to the development, who did not wish to be named. Both DLF and Bharti Realty spokespersons said they do not comment on market speculation.

Bharti Realty, who has been keen on expanding its footprint in Noida, has been in talks with a number of other landowners in sector 144 and 145 of Noida for potential buys and joint development agreements. These deals, however, have fell through over the last few quarters.

The company had earlier bought a commercial plot of land from DLF in 2010-11 in Gurgaon's sector 65 on which it has just started developing an office building. According to one of the persons, Bharti Realty is currently negotiating with Bharti-Walmart to bring them in as an anchor tenant. This is expected to be Bharti-Walmart's headquarters in the future. "They are looking at expanding their real estate business as the group's in-house requirements for space are growing," he said.

For DLF, this sale is part of their on-going divestment of non-core assets.

To reduce mounting debt, DLF has decided to sell its non-core assets, which include both land, SEZs and some office buildings. The company's net debt stands at 22,758 crore at the end of December 31, 2011, down marginally by 169 crore in the October-December quarter.



DLF may sell 2 Noida plots to Bharti Realty for Rs 250 crore - The Economic Times

MANOJa

New Delhi: At least four suitors have emerged for the wind power business of DLF Ltd, India’s largest real estate developer, which is seeking to raise money by divesting assets that aren’t integral to its main business.

Green Infra Ltd, a company promoted by IDFC Private Equity Co. Ltd; Sumant Sinha’s ReNew Power Ventures Pvt. Ltd, Swraj Paul’s Caparo Group; and Orient Green Power Co. Ltd have evinced interest in acquiring the business, people familiar with the situation said.

DLF plans to sell assets that are “non-strategic” to its main business of property development as it seeks to reduce debt, which was Rs. 22,758 crore at the end of December. According to a Motilal Oswal Securities Ltd research report dated 13 February, DLF expects to raise Rs. 1,000 crore from the sale of its wind power business.
To hive off the unit, the company has hired audit and consulting firm Ernst and Young (E&Y).

This is the second time DLF has put its wind assets on sale. A similar attempt was made earlier, as reported by Mint on 1 April 2009, but had to be abandoned because of differences over valuation.

DLF has an installed capacity of 228.7 megawatts (MW) and owns wind farms in Gujarat, Rajasthan, Tamil Nadu and Karnataka.

“There is considerable interest in DLF’s wind assets. Some of the firms that have evinced interest to Ernst and Young are Green Infra, ReNew Power, Caparo Group and Orient Green Power,” said a person aware of the development, requesting anonymity.

Another person familiar with the situation, who also didn’t wish to be identified, confirmed E&Y’s mandate, but declined to comment on the companies mentioned above.

There have been indications that the Indian wind power sector is looking to consolidate. The Economic Times newspaper reported on 13 February that DLF is banking on the sale of Aman Resorts and its wind energy venture to reduce debt. Even Lanco Infratech Ltd has decided to exit the segment.

According to a company presentation made to analysts, DLF reduced its net debt by Rs. 169 crore at the end of the fiscal third quarter to Rs. 22,758 crore from the previous quarter (July-September), when it had reported net debt of Rs. 22,927 crore. The company closed two information technology park deals during the the third quarter valued at Rs. 785 crore.

A 13 February report by Nirmal Bang Institutional Equities Research said: “Despite such non-core asset sales, cash flow after considering interest costs and capex remained negative at Rs. 6 billion for 9MFY12 (first nine months of fiscal 2012), indicating worsening cash flow situation from core operations.”

The report added: “The management has given guidance regarding debt reduction of Rs. 50 billion in the coming quarters as and when it closes the deal for its hospitality and wind power businesses.”

While Caparo Group couldn’t be contacted, spokespersons for DLF, E&Y and IDFC declined to comment. Questions emailed to Orient Green Power on Saturday hadn’t been answered at the time of going to press on Tuesday.

“We are very busy working on our pipeline of projects and hence are unable to comment on these questions,” Sumant Sinha, chairman and chief executive officer of ReNew Power Ventures, said in an emailed response to questions from Mint. “Acquisition opportunities are not very interesting as we are seeing a very good pipeline of our own projects.”

Interest in wind power generation has been aided by the government’s offer of fiscal incentives, including tax breaks for 10 years and depreciation benefits of 80% on investment in the first year of a project’s operation, besides a chance to earn carbon credits.

While there is interest in developing wind energy sources from conventional power generation utilities, the funding of such efforts has become a concern. It takes capital expenditure of Rs. 4.2-4.5 crore per MW of power generated through coal-based or gas-based projects, compared with wind-based projects requiring Rs. 6-7 crore per MW.



DLF bid to hive off wind power assets gets response - Home - livemint.com

edmundhonda

While there are naysayers of DLF due to heavy debt burden, one thing to note is that their assets on the books are at BOOK VALUE and not MARKET VALUE. For each asset they have not yet monetized, the value stands where it bot them.

While I myself am worried about developers' aggresive growth, I believe land bank is something which has saved lot of marquee developers outside of India (even if their land bank is revalued each yr to reflect market value) and don't think in this aspect, India developers story will be any dfferent.

Cash is king... but land is also finite.

Indigill

Land is like any asset. Its value is what someone is ready to pay and if there is nagative sentiment the prices come down. Imagine if DLF wanted to sell 50% of its inventory to service its debt, it will generate nagative sentiment bringing prices down which in turn will make valuation of other 50% at much lower price. So at this time only cash is king.

At the moment market is on the verge of correction and anyone with cash can get good rate discounted property. They may get 50% more value for same cash 3-4 months down the line. So anyone looking to invest at this time should hold on to their reins. Its time to book balcony seats and watch the race unfold.

MANOJa

DLF is back in the market to sell it's prime land in Mumbai's Lower Parel area. The company is in close talks with a consortium of developers who have offered to pay Rs 2500 crores for the land parcel, sources said.

Consortium includes Mumbai-based developer Vallabh Sheth and Pune-based builder Avinash Bhonsale. A well diversified group with realty business may also join the group for funding purposes.

The consortium of developers has offered to pay Rs 2000 crores over a period of two years and have offered to pay Rs 500 cr in case the FSI (floor to space Index) is enhanced with necessary approvals. The Lower Parel land is a huge parcel of 17 acres with around 3 million square feet of developable area.

Also in the race are Piramal Realty, Oberoi Realty and many other developers who have eyed DLF's property but the deal has not fructified as none of the offers have matched up to the valuation expectations of the company, sources said.

All the parties involved have declined to comment of the developments. The land parcel was bought by DLF from NTC for Rs 700 cr in 2005.