DLF Cyber City Developers (DCCDL) has taken a loan of Rs 2,400 crore from the State Bank of India to settle its existing debts and fund future expansion plans. The loan has been given at an interest rate of 7.35 percent, to be repaid over a period of 15 years. It has been acquired against a rental portfolio of 2.4 million square foot at DLF Cybercity Gurugram.
DCCDL has an annual rental income of Rs 3,500 crore and a strong tenant profile which will be able to raise revenue to repay the loan. The loan is one of the biggest loans to be granted by a bank at a time when banks are unwilling to give credit lines to real estate developers.
DLF plans to use 1,950 crores to refinance its existing debts and 450 crores to expand its business, financing the construction of its major projects, including under-construction projects in Chennai and Gurugram. DLF plans to expand its construction properties and add 18 million square foot of commercial assets to the properties under it.
For the near future, DLF will be under a debt of Rs 20,000 crores as it gets ready to expand its assets aggressively. But in the long run, DLF is looking to reap greater profits by increasing its revenue by a wide margin. DLF’s management is confident of DLF Cyber City’s growth as the rental collection and occupancy of DLF’s properties was at a strong 95 percent during the first half of this financial year.
Another side of DLF’s finances during the COVID-19 lockdown is that although the company went on with rent collection from its leased office spaces, in some cases the rent payment was deferred. Another aspect of revenue loss was due to the closure of shopping malls that affected the mega retail properties of DLF. The malls under DLF have only opened now after the Centre allowed them under the Unlock plan.
The malls have seen a plunge in footfall amid COVID-19 precautionary measures in effect. Current footfall is around half of what it used to be before the pandemic. The DLF management has found its silver lining even amidst the decline in footfall as now only serious buyers visit the malls, which results in a higher rate of conversion (higher revenue per footfall)
The DLF group, however, is optimistic that the footfall will return to previous figures as people come out of the fear of COVID-19 and adapt to the COVID-19 rules while shopping. The group has started collecting rental income from its new Cyber Park project, which will see an increase in its revenue as well.
As the retail sector and real estate sectors are set to revive in the coming few months, the DLF group can finally get back to expanding its footprint and revenues again.
Comment here