DLF Set to Merge DAL

DLF Ltd, the largest real-estate developer in the country by market capitalisation, is set to merge DLF Assets Ltd (DAL), a company held by promoters Kushal Pal Singh and Rajeev Singh, and make it a subsidiary to synergise the businesses, an official familiar with the process said. Currently, DAL is a separate legal entity.

Stage Two of the plan is a listing of DAL on the Singapore real estate investment trust market next year. DLF is likely to convert Rs 2,800 crore of receivables from DAL into equity and, along with a share-swap agreement between another of its subsidiaries and DAL, take a controlling stake in the entity. Making DAL a subsidiary would boost DLF’s rental income. It also allows DLF to tap a fund source discounting its lease rentals to reduce debt.

DAL currently has 6.5 million sq ft of commercial space which earn lease at an average Rs 55-60 per square feet. It expects to have 8 million sq ft of leaseable assets in the next 12 months and a total 13 million square feet over the next two years. DLF’s committee of independent directors has appointed Citibank, Ernst & Young and Grant Thornton as advisors to the proposed deal. The valuation could not be immediately ascertained but sources said swap is the likely favoured route as DLF is reeling under high debt burden and lower demand, especially in the commercial property segment.

News Published Under:   Real Estate Developers |

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