DLF's rental arm to buy Hines'

By innovative | 06 Jan, 2020

DLF's rental arm to buy Hines' stake in One Horizon Centre for Rs 780 crore

On Friday, Realty's major DLF announced that its Rental arm DCCDL has agreed to acquire Rs 780 crore holdings of US-based Hines in a premium Gurugram commercial project. Look out for more on this thread. 

A securities buyout agreement with Hines-managed funds for acquiring its interest in the Fairleaf Real Estate, which holds and operates 'One Horizon Centre,' has been signed by DLF Cyber City Developers Ltd (DCCDL), the joint venture company of the GIC sovereign wealth fund, DLF.

A regulatory filing said that obtaining consideration for this acquisition is around Rs 780 crore, subject to customary closing changes.

In the One Horizon Centre, Hines has around 52%, and with DCCDL, the rest. The first right to deny the acquisition of Hines' stake exists for DCCDL.

The One Horizon Center commercial tower has a leasable surface of approximately 813,000 square meters, with high-end office facilities and additional retail space.

The purchase will be subject to customary closing conditions and will be completed in the coming quarter.

The company has acquired full ownership of this land, Sriram Khattar, MD-Rental Firm, DLF, said.

According to Mr. Khattar "We have faith in that this acquisition will add around Rs 150-160 crore of rental incomes annually to our strong rental platform," The acquisition is an asset of the trophies.

The DCCDL platform will have an existing rental portfolio of about 34 million sq ft after the acquisition.

DLF entered into this joint venture with GIC in December 2017, when DLF promoters sold almost Rs 12,000 crore of their entire 40 percent interest in DCCDL.

This transaction included selling DCCDL to GIC for approximately Rs 9,000 crore of 33.34% of the stake and buying back the remaining Rs 3,000 crore shares from DCCDL.

In DCCDL, the DLF holds 66.66%, while the GIC holds the remaining portion.

The rental income of the DCCDL in the previous fiscal at Rs 3,006 crore was up 15 percent due to the strong demand for high-quality office and retail spaces.

The purchase would have to be negotiated and completed next year, subject to customary closing conditions. The company has been acquired by Sriram Khattar, MD-Rental Corporation, DLF, as a whole.

According to Khattar, the transaction is expected to add high value to the rental platform by collecting approx. Rs 150-160 crore in annual rental revenue. The acquisition will provide us with a distinct trophy asset. Following the transaction, the DCCDL platform would have an operating rental portfolio of about 34 million sq ft.

In December 2017, when DLF promoters sold the entire 40 percent stake in DCCDL for almost 12,000 Crore, they signed up for this joint venture with GIC. This arrangement consisted of selling DCCDL's 33,34% shares for approximately 9,000 crores and buying back the remaining DCCDL shares of Rs 3,000 crores.

DLF holds a share of DCCDL 66.66 percent, while GIC holds the remainder. The last fiscal increase of DCCDL's rental income was at Rs 3,006 crore, 15 percent, due to the high demand for office and retail quality spaces.