DLF appoints consultants to get commercial assets ready for REIT

New Delhi: Real estate developer DLF Ltd has appointed three leading advisory firms – Morgan Stanley, KPMG and Shardul Amarchand Mangaldas & Co – as consultants to get its rental yielding commercial assets ready for a real estate investment trust (REIT) listing.

The advisors will help the company manage the internal structuring needed to get assets listing- ready.

“We have appointed consultants as there would be some amount of corporate structuring and reorganising to make the DLF Cyber City Developers Ltd. (DCCDL) rental platform REIT-ready. This process will take about 10-12 months to complete. It is up to the shareholders to decide when they wish to launch the REIT,” Sriram Khattar, managing director, DLF Rental Business, told ET.

Giving updates on REIT to investors during the quarterly results call, DLF said that market indicators for REIT listing are favourable as there is enough liquidity in the capital markets. “Low interest rate regime, efficient listing framework by the regulator and successful listing of two REITs give us faith that the market is ready for another REIT,” it said.

Shardul Amarchand Mangaldas & Co has been appointed as legal advisor while KPMG will be tax advisor.

Deliberations are being held on key points such as corporate structure, capital structure and asset perimeters, said company executives.

Debt financing of REITs and infrastructure investment trusts (InVITs), announced in the budget for 2021-22 on Monday, will provide an opportunity for the trusts to acquire more assets in their portfolio, said property consultant JLL.

“This will lead to the listing of more REITs/ InVITs in 2021. The unlocking of value of real estate assets, especially in office segment, will provide growth capital for the sector,” said Samantak Das, chief economist, JLL India.

DLF reported a 9% year-on-year increase in net profit for the quarter to December 2020, driven by improvement in residential demand and record low interest rates.

According to DLF, rental business continued to exhibit resilience and the company witnessed quarter-on-quarter growth in rental income as retail business is improving every quarter.

DLF Cyber City Developers Ltd. (DCCDL), the rental arm of the company, reported profit of Rs 249 crore. The company’s office business remained stable and exhibited strong collections of 98%.

Amid the pandemic, Mindspace Business Parks, backed by K Raheja and Blackstone, had launched a REIT to raise Rs 4,500 crore.

Brookfield is also in the process of launching a REIT, with an issue size of over Rs 4,000 crore, which would be the third REIT in the country.

India’s first REIT was listed in April 2019 by Embassy group and Blackstone-backed Embassy Office Parks.