DLF's Rental Arm Secures Rs.2400 Crore from SBI to Refinance Debt & Expand

The real estate firm DLF’s rental arm DCCDL has raised Rs. 2,400 crore from SBI in one of the largest lease rental discounting (LRD) deals. The company has raised the fund to refinance its existing debt and to invest in the future expansion plans.

In an interview with PTI, Vivek Anand, Chief Financial Officer, DLF Group says, “DCCDL has secured funding of Rs 2,400 crore from India’s largest public sector bank SBI. It sets a benchmark for lease rental discounting (LRD) in the country. The fund has been raised through the LRD route against a rental portfolio of 2.4 million sq ft area in Cyber City, Gurugram.” He adds, “It is one of the biggest disbursements by any public sector bank during the COVID-19 pandemic. This also clearly demonstrates our strong tenant profile and ability to generate cash for a long-term period.”

Vivek further states that the debt has been raised at an attractive interest rate of 7.35 percent. This permits the company to cut down the interest charges. However, DLF Cyber City Developers (DCCDL), the joint venture between DLF and Singapore sovereign fund GIC, has office space and rental properties spreading across 33 million sq ft that produces an annual income of Rs. 3,500 crore. Furthermore, DLF also possesses 66.66 percent of stakes in DCCDL while GIC holds the remaining.

On the utilization of the funds, Vivek says that DCCDL has refinanced its existing debt that is worth Rs. 1,950 crore and the remaining Rs.450 crore would be used for further expansion. Presently, DCCDL has a debt of around Rs.19, 500 crore. He also hinted that the company has sketched a plan to develop 18 million sq ft of commercial assets out of which about four sq ft is already under construction in Gurugram and Chennai.

Furthermore, the company’s CFO is expecting the DCCDL’s rental income to increase in the days to come, as the rent for its Cyber Park project has begun to grow from this month. Also, he believes that the 2.5 million sq ft project would aid in earning Rs.330 crore annually. DFL had entered into a joint venture with GIC in December 2017, post acquiring about 40 percent stakes from its promoters in the DCCDL for around Rs. 12, 000 crore. Additionally, the deal also consists of the sale of a 33.34 percent stake in DCCDL to GIC for about Rs. 9,000 and buyback of the remaining shares worth about Rs. 3000 crore by the DCCDL.