DLF Ltd, the country's largest real estate firm is set to merge DLF Assets Ltd (DAL), the real estate investment trust into itself. DAL, which is promoted by DLF promoters K P Singh and son Rajeev Singh, buys commercial property from DLF and collects lease rentals from it. This is part of company’s plan to synergize the business, and to make DAL a subsidiary.
The company has also called for a Board meeting to discuss the integration with the promoter group company, it said in a filing to the stock exchanges. The transaction will be done through DLF Cyber City Developers Ltd, a wholly-owned subsidiary of DLF. A board meeting of DLF will be held on December 15, to discuss about the integration of Caraf Builders & Constructions Pvt Ltd with DLF Cyber City Developers. Caraf Builders, which owns DAL, is a promoter group company and is engaged in the business of development and leasing of commercial properties, said a company filing to the stock exchange.
Reports suggest that the move is part of company’s plan to repay some of DAL debt and bring the commercial properties of the group under one brand. The deal will happen with a combination of cash and equity. The equity value of the deal, which includes DAL’s Rs 7,300 crore debt, is around Rs 2,500 crore, according to a report by Economic Times. The report further adds that DLF Cyber City will issue fresh shares to the founders, who will own 38% in this unit after the transaction, while DLF's holding will go down to 62%.
The development happened after a couple of days when New York-based hedge fund DE Shaw had sold a 36% stake in DLF Assets to its founders for $500 million, out of its 40% stake picked up for $400 million two years ago. DAL also has commitments from Symphony Capital, which bought 45% stake for $650 million in 2008.
DLF Assets was set up as a real estate investment trust to put money into SEZs, infotech parks as well as to buy commercial property assets from group company DLF Ltd, currently has 6.5 million square feet of commercial space. The company expects to have 8 million square feet of leaseable assets in the next 12 months and a total of 13 million square feet over the next two years.
