Real estate major DLF has no plans to launch public offer of REIT in the next one year to monetise its rent-yielding commercial properties, its CEO Ashok Tyagi said.
DLF holds bulk of its rental assets (offices and shopping malls) through joint venture firm DLF Cyber City Developers Ltd (DCCDL).
DLF holds 66.67 per cent stake in DCCDL, while Singapore sovereign wealth fund GIC has 33.33 per cent shareholding.
In the last two years, DCCDL has completed all homework to be ready to list its Real Estate Investment Trust (REIT) on stock exchanges by launching an Initial Public Offering (IPO).
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DLF’s top management has been maintaining that the timing for REIT will be decided by the two joint venture partners.
“We are not in a hurry. There is no plan to launch REIT in the next one year,” Tyagi told PTI when asked about the company’s strategy regarding proposed launch of REIT.
The decision comes amid global uncertainties and high interest rates regime.
In January 2021, DCCDL had appointed Shardul Amarchand Mangaldas & Co as legal advisor, Morgan Stanley as banker and KPMG as financial/tax advisor to create right corporate and capital structures for the proposed launch of REIT. DLF’s arm DCCDL has become REIT-ready now and will wait for the conducive market conditions to launch the public offer.
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“There is no change in the plan or the direction and I think both GIC and we are reasonably committed to the entire thing, but given the high interest rate scenario currently going on and the overall uncertainty, this obviously is not the best time for a new REIT,” Tyagi had told in an investors call in December 2022.
DCCDL has rent-yielding office and retail properties of around 40 million square feet with an annual rental income of around ₹4,000 crore.
In December 2017, DLF had formed a joint venture with GIC after its promoters sold their entire 40 per cent stake in DCCDL for nearly ₹12,000 crore.
This deal included sale of 33.34 per cent stake in DCCDL to GIC for about ₹9,000 crore and buyback of remaining shares worth about ₹3,000 crore by DCCDL.
In India, there are three listed REITs — Embassy Office Parks REIT, Mindspace Business Parks REIT and Brookfield India Real Estate Trust.
The first REIT of ₹4,750 crore issue size was listed in April 2019 by Embassy group and Blackstone-backed Embassy Office Parks.
In August 2020, K Raheja and Blackstone-backed Mindspace Business Parks launched the country’s second REIT to raise ₹4,500 crore.
Global investment firm Brookfield has listed the country’s third REIT after raising ₹3,800 crore through an IPO.
Real estate investment trust (REIT), a popular instrument globally, was introduced in India a few years ago to attract investment in the real estate sector by monetising rent-yielding assets.
It helps unlock the massive value of real estate assets and enable retail participation.
In November last year, global investment firm Blackstone-sponsored Nexus Select Trust filed the draft paper with market regulator SEBI to launch India’s first public issue of retail-assets backed REIT to raise around USD 500 million.