India’s largest realty firm DLF is planning to raise up to Rs 3,500 crore through issue of securities backed by IT-SEZs to replace its costlier debt.
In May, DLF had launched >the country’s first Commercial Mortgage Backed Securities (CMBS) to raise Rs 525 crore against a shopping mall ‘DLF Emporio’ in the national capital.
Last month, it raised another Rs 375 crore through CMBS backed by ‘DLF Promenade’ mall here, taking the total proceeds to Rs 900 crore. The two luxury malls have 7.5 lakh sq ft of leasable area.
According to sources, DLF plans to raise further around Rs 3,000-3,500 crore through CMBS route backed by some of its IT- SEZs. The company has office assets of 26-27 million sq ft, of which 12 million sq ft is IT-SEZs. Overall its annuity income grew to Rs 1,950 crore during financial year 2013-14.
It would utilise the funds from this process to improve its balance sheets and access cheaper debt, they said, adding that Credit Suisse will help DLF in the CMBS issue.
In the two rounds of CMBS, DLF raised funds at a coupon rate of 10.9 per cent an annum and maturity of 7.5 years.
DLF’s net debt stood at Rs 18,526 crore as on March 31, 2014 —— a drop of Rs 1,400 crore from Rs 19,926 crore at the end of the October—December quarter. The company’s finance cost stood at nearly Rs 2,500 crore last fiscal.
“The company is now comfortable with its net debt levels.
Going forward, it shall strive not only to maintain the current level of debt but also to improve the quality and cost of debt,” DLF had said on May 29 while announcing its fourth quarter results of last fiscal.
“The recent successful launch of India’s first Commercial Mortgage Backed Security, rated AA (SO) by Crisil, is an effort in that direction. The company hopes to do more such issuances in the medium term,” it had said.
CMBS is a debt instrument through which the developers can raise capital against commercial properties. The funds available with the issuer during the tenure of the instrument are higher than lease rental—discounting loans from banks.
DLF has a total land bank of about 300 million sq ft, of which nearly 60 million sq ft of projects under construction.