Real estate firm DLF Ltd’s rental arm DLF Cyber City Developers Ltd (DCCDL) will raise ₹400-500 crore of debt and another ₹200-300 crore from internal accruals to buy a majority stake in One Horizon Center in Gurugram, said a top executive.
DCCDL has agreed to acquire US development and investment firm Hines’ 52% stake in the commercial office project in Gurugram for ₹780 crore and has exercised the first right of refusal to acquire Hines’ stake. “As a premium commercial asset, One Horizon Center is located in DLF-5 and sits beautifully in DCCDL’s portfolio. This acquisition will be highly value-accretive for us and will add approximately ₹150-160 crore of annual rental revenue,” Sriram Khattar, MD-rental business, DLF said.
The project has around ₹400-500 crore of debt while the enterprise value would be around ₹2,000 crore.
Post the completion of this purchase, DCCDL will have around 34 million sq. ft operational rental portfolio. DCCDL, which currently has around ₹19,500 crore of debt, will see rise a rise in debt levels post the borrowing. It has around ₹1,000-1,200 crore of cash on the balance sheet.
DCCDL is a joint venture firm of DLF and Singapore’s sovereign wealth fund GIC Pte Ltd, where the former holds 66.66% stake while the latter has the rest.
DLF in a regulatory filing on Friday evening said its joint venture firm DCCDL has entered into a securities purchase agreement with funds managed by Hines for acquisition of their stake in Fairleaf Real Estate, which owns and operates ‘One Horizon Center’.
One Horizon Centre is a mixed-use development with 8,13,000 square feet leasable area with mainly office spaces along with some retail space.
DLF and Hines entered into a joint venture to develop One Horizon Center in 2008. The developer formed a second joint venture with Hines last year to develop a commercial project in Udyog Vihar, Gurugram, at an investment of ₹1,900 crore. The project will be developed on 11.76 acres of land owned by the JV.
DLF had in February 2018 emerged as the highest bidder for the land parcel that was e-auctioned for a record of ₹1,496 crore. DLF Home Developers Ltd and Green Horizon Trustee (an affiliate of Hines) have entered into the joint venture, in which the former will hold 67% stake while the remaining 33% will be held by Hines.
Khattar said 2020 should be a treated like a gap year due to the overall disruption caused by the pandemic.
“We think while work-from-home has impacted the overall office business, when companies return to offices, companies like DLF will benefit. Companies will then look at good quality buildings and locations,” he added.
DCCDL inked a lease deal of 7.7 lakh sq ft with Standard Chartered GBS at DLF Downtown, Chennai. It also leased 2 lakh sq ft to Facebook in Cyber City, Gurugram.
