Singapore’s GIC favours IPO route for commercial JV with DLF
Real estate developer DLF Ltd and Singapore wealth fund GIC are exploring an initial public offer for their joint venture DLF Cyber City Developers Ltd (DCCDL), rather than floating a real estate investment trust, where regulations are more restrictive, sources said.
The joint venture, DCCDL, in which DLF holds the majority 66.67 per cent stake, is its rental business with over 40 million square feet of operational commercial portfolio, and 19 msf under development of which 7 msf are due for completion this year.
The two partners have been exploring various options to monetise the venture over the last few years and a REIT was one of the routes that was discussed. Following the successful listing of the three office REITs – Embassy Office Parks REIT, Mindspace Business Parks REIT, and Brookfield India Real Estate Trust – DLF was in favour of floating a REIT, but plans were postponed pending approval from GIC.
Recently GIC is understood to be in favour of a regular equity issuance, as REIT regulations are seen as restrictive with a high dose of compliance. Under the REIT regulations in India at least 80 per cent of the assets by value held by the REIT should be completed and generating rental income. They have to distribute at least 90 per cent of their net distributable cash flows to the unitholders periodically. There are no such strictures for companies whose shares are listed on the exchanges.
Sources said the talks were still on between the partners as to the best way to monetise the venture, with IPO being a preferred mode according to current thinking.
GIC did not respond to a request for comment sent through its website while there was no response from DLF to an email request.
The office assets of DCCDL are concentrated in the National Capital Region, primarily in Gurgaon and other cities such as Chennai, Chandigarh, and Hyderabad. It has more offices coming up in Gurugram and Chennai. The occupancies at its non-SEZ offices are at 98 per cent, while in the SEZ portfolio it is 87 per cent.
About a tenth of the total operational portfolio consists of retail assets. It has three upcoming retail plazas totalling 1.4 msf, rents from which will start from the middle of next fiscal year. Retail occupancy is 98 per cent.
The net debt of the company was ₹16,713 crore at the end of December 2024, a tad down from the ₹17,583 crore reported at the end of March.
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