New Delhi: India's largest realty company DLF plans to launch the Real Estate Investment Trusts (REITs) next year to monetise its commercial properties and is looking for strategic and financial partnership with global players.
DLF is targeting to "create one or more sizeable REIT platform next year ?- one for office and the other for retail to recycle capital for further growth and spin off the RentCo attributable debt", it aid in an analyst presentation.
The company has strong a portfolio of office and retail properties from which it at present earns about Rs 2,100 crore as rental income.
DLF said the objective of launching REIT would be not only to maximise the present value of the assets but also capture the immense potential of growth that a growing Indian economy has to offer in the future.
In September, market regulator Sebi had notified norms for listing of business trust structures, REITs and InvITs ( Infrastructure Investment Trust), that would help attract more funds in a transparent manner into realty and infrastructure sectors. These trusts would get tax incentives.
As growth cycle in the office and retail segments of rental business improves, DLF said, it is reviewing all strategic options so that the company not only maintains its leadership position but also harnesses the growth that the market shall offer.
DLF is also seeking to create long-term free cash flows in the form of dividend flows as holders of REIT units and fees from the management of the same.
"To achieve the above, the company is exploring partnership with other global players, both strategic and financial partners, who may have an interest in participating with DLF in this foray. This could include en-cashing the company's part investment in RentCo business," it added.
It noted that despite turbulent times since the global financial crisis, the company created a large annuity stream of income of a business with an asset base of 27 million sq ft and expected annuity income of about Rs 2,100 crore this fiscal.
On August 10, the SEBI had cleared new norms for setting up and listing of REITs and InvITs.
The new guidelines, which herald a new investment avenue in India on the lines of one in developed markets like the US, UK, Japan, Hong Kong and Singapore, would allow trading in units of REITs and InvITs like any other security on stock exchanges.
Property consultants expect that REITs could attract USD 8-10 billion worth funds.
