India’s largest realty firm is going to raise approx. Rs 3,600 crore

As per the recent reports, DLF, the India’s largest realty firm is going to raise approx. Rs 3,600 crore in current quarter by issuing the securities, which is backed by its IT-SEZ and it is the part of DLF’s strategy to replace the debt of higher interest rates. The same report stated that on Tuesday, DLF rallied about 2.27 per cent in intraday trade. However; the stocks must gains to settle on 0.7 per cent which is higher at Rs 139.3.

DLF is also planning to issue its first ever REIT (Real Estate Investment Trust) in the present fiscal to monetize its commercial assets. According to the statement of Ashok Tyagi, who is Chief Financial Officer of DLF, “Currently we are actively working with different rating agencies and investment bankers for CMBS issue (Commercial Mortgage Backed Securities). The more he added that we don’t have any kind of time frame to launch the Commercial Mortgage Backed Securities, but sources are indicating that DLF will launch its CMBS in next two months.

In February 2015, DLF was set to launch its CMBS of about Rs 3,600 crore as a part of SEZ business to improve its quality of debt. In present the company is waiting for SAT (Securities Appellate Tribunal) judgment on the SEBI’s order that had ban DLF from accessing the capital market for 3 to 4 years.

In March 2015, Securities Appellate Tribunal had passed the order on the basis of ‘majority order’ by imposing the ban for next three to four years from the side of SEBI. In 2014, the DLF had launched the country’s first ever CMBS and was successfully raised more than Rs. 900 crore in two rounds of CMBS with the help of two shopping malls in Delhi. Currently the net debt of DLF is about Rs 20,336 crore as per the data on December 31, 2014 out of which Rs 14,000 crore are from the rental arms.

It is expected that soon company will monetize its commercial assets to list REITs (Real Estate Investment Trusts), as per the statement of Tyagi. Whereas; in current fiscal DLF also want to float its first REIT but currently it is subject to receive the requisite approvals. The more he added that Real Estate Investment Trusts now become viable as government has clarified that MAT (minimum alternate tax) will be applicable on the time of actual transfer of these units. Apart from all that the DDT (dividend distribution tax) will continue to be an alternative for some of the real estate players who are looking for REITs. In simple terms we can say that there are 4 to 5 pilot REITs are about to launch in this fiscal year.

It is clear that REITs will help to unlock the value of completed and leased assets which can be used for debt and capex reduction. The DLF is planning to raise the Rs. 3,000 crore via PE (private equity) on each project level, as per the statement of CFO of DLF. However; the discussion is underway with some of the private equity players, but still there are no timeline for such PE deals. Apart from that company is planning to divest around 50 per cent stake in four of the latest projects to PE firms. Now its clear that DLF is looking for the way to raise the funds through PE routes to boost its cash flow because there have been sluggish nature in the sales of houses in last year.

In past one to two year the DLF has land bank from about 300 million sq ft out of which approx. 50 million sq ft is under construction and due to that the share price went up to 1.25 per cent which is Rs 138 piece on the BSE index with market cap of Rs 24,644 crore.

Real estate in Navi Mumbai is all set to witness yet another boom with the prime minister Narendra Modi laying the foundation stone for the Rs 4,000 crore special economic zone at Jawaharlal Nehru Port Trust (JNPT).

Navi Mumbai where the property prices are as high as those in Thane is all set to witness a surge in prices, says Arvind Goel, president of Maharashtra Chamber of Housing Industry (MCHI), Navi Mumbai unit.

According to Goel, the inauguration of government-owned SEZ holds a lot of significance for Navi Mumbai. Currently, a 2BHK in Navi Mumbai costs Rs 70-90 lakh. A 20-30% rise is expected. Arvind Goel, says demand for commercial property will also go up. “There are 250 supplementary industries, directly and indirectly dependent on real-estate sector. A real-estate boom will develop them as well,” he said.

In three years, the SEZ will start. Since land for the 277-hectare zone is already acquired and in possession of the central government, no delay is feared. Widening existing road network to 6-8 lanes and development of service are also proposed to facilitate the vehicular traffic movement within the city.

The Thane-Belapur belt, known as an industrial belt, is slowly turning into a realty belt with the swanky residential and commercial complexes replacing the smoke stacks. “Just as the property market in Pune developed immensely, thanks to the IT industry. Employment is main factor for the growth of the housing industry and cities. Similarly, Navi Mumbai will grow in the next five years as there will be lots of employment opportunities with new start-ups, BPOs, KPOs and other new age industries coming up in the satellite township,” a realty watcher explained.

“Now developers will buy huge tracts of land in Panvel and other locations to develop townships. It’s a good sign that Navi Mumbai is developing. It will become another developed city in the near future,” says Manohar Shroff, chairman of Shivam Developers, adding that housing and real-estate will attract lots of investors to Navi Mumbai.

Some developers have added a note of caution for their colleagues who are gung-ho about the development of real estate on the back of SEZ planning. They say that the builder fraternity should not create a false euphoria about the housing project or it might turn out to be another bubble burst.

Prime Minister Narendra Modi laid the Foundation Stone of Jawaharlal Nehru Port Trust Special Economic Zone (SEZ) , at Sheva in Navi Mumbai.

He also laid the Foundation Stone for widening of Port Connectivity Road from JNPT to the National Highway and symbolically handed over land allotment letters to JNPT Project Affected Persons under the 12.5 % scheme.

Addressing a large public gathering at the function site, the Prime Minister said his Government had conceived the Sagarmala, an ambitious project for maritime states. This would envisage not merely port development, but port-led development which would include ports, SEZs; and rail, road, air and waterway connectivity with the hinterland, including linkages of cold storage and warehousing facilities.

Noting that two-thirds of all global trade and 50 percent of container trade happens through the Indian Ocean, Modi highlighted the importance of the ports sector. “Ports can become gateways to India’s prosperity,” he added.

The Prime Minister said the Government is concerned at the large number of stalled SEZ projects across the country, and a high-level team has been constituted to review the problems and resolve them at the earliest.

The Prime Minister said export promotion was the need of the hour. “Until we join manufacturers in export promotion, and unless States and Centre work together, we cannot achieve new heights in exports” he observed. The Prime Minister added that the Union Government had recently convened a meeting with States to understand bottlenecks in exports, and States would soon be given the right to form their own Export Promotion Councils. “Let there be competition among States for exports,” the Prime Minister said.