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DLF rental arm to buy Hines stake in commercial project in Gurugram for Rs 780 cr

Realty major DLF‘s rental arm DCCDL has agreed to acquire the entire 52 per cent stake of US-based Hines in a premium commercial project in Gurugram for Rs 780 crore.

In a regulatory filing late last night, DLF informed that its joint venture firm DLF Cyber City Developers Ltd (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’.”

The DCCDL is a joint venture firm of DLF and Singapore’s sovereign wealth fund GIC. DLF holds 66.66 per cent stake in the DCCDL while GIC has the rest.

“The purchase consideration for this acquisition is approximately Rs 780 crore, subject to customary closing adjustments,” DLF said.

Hines has nearly 52 per cent stake in the One Horizon Centre while the rest is with the DCCDL. DCCDL exercised the first right of refusal to acquire Hines’ stake.

The commercial tower ‘One Horizon Center’ has a leasable area of about 8,13,000 square feet, mainly high-end Grade A office spaces along with complementary retail space.

The acquisition is subject to customary conditions to closure and is expected to be consummated in the next quarter.

When contacted, DLF’s MD-Rental Business Sriram Khattar said the company has acquired complete ownership of this asset at a right price.

“We will fund this acquisition from internal accruals and bank loans,” he told PTI.

The deal is likely to be completed by February, Khattar said, adding that the company would get an additional annual rental income of Rs 150-160 crore after this deal gets concluded.

“This acquisition adds another trophy asset to our strong rental platform. We believe that this acquisition will be highly value accretive for us,” he said.

Market sources said the deal has been struck at a total enterprise value of Rs 2,000 crore, while the project had a debt of around Rs 500 crore.

Post acquisition, the DCCDL platform will have about 34 million sq ft of operational rental portfolio. DCCDL had reported a 15 per cent rise in its rental income last fiscal at Rs 3,006 crore on strong demand for quality office and retail spaces.

DLF and Hines entered into their first joint venture in 2008 to develop One Horizon Center in DLF-5 Gurugram, Haryana.

They formed another joint venture in March last year to develop an office project in Gurugram on 11.76 acre land parcel bought by DLF for nearly Rs 1,500 crore through e-auction conducted by the Haryana government in February 2018. DLF had sold 33 per cent stake in this commercial project to Hines, for around Rs 650 crore.

Meanwhile, DLF had in December 2017 entered into a joint venture with GIC when DLF promoters sold their entire 40 per cent stake in DCCDL for nearly Rs 12,000 crore.

This deal included sale of 33.34 per cent stake in the DCCDL to GIC for about Rs 9,000 crore and buyback of remaining shares worth about Rs 3,000 crore by the DCCDL.

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