Real Estate Investment Trust is a new investment platform in the real estate sector. As many investors are looking forward to virtually investing in income-generating properties, DLF won’t just keep watching the game! It’s now engaging itself in REIT and this has become a topic of buzz amongst investors.
DLF’s significant victorious past of constructing residential, retail, and commercial spaces, taking a surprising turn towards REIT is a topic of buzz! Apart from that, this big player is full-fledged preparing itself for its entry into REIT! Will it be worth investing in? Let’s find out!
What’s in DLF’s past?
Since 1946, the company has built well-known residential colonies like- Model Town, Rajouri Garden, Krishna Nagar, and Hauz Khas. The go-getter company did not stop when the Delhi Government took control over all private real estate constructions when the Delhi Development act 1957 was passed. Instead, they started constructing in Gurgaon which is an out-of-Delhi premise. As DLF construction increased in Gurgaon, its economic growth in terms of real estate started expanding.
Apart from building commercial and residential spaces, along with HUDA I.E Haryana Urban Development Authority, in 50-50 partnership, constructed a 10.5km road network in Gurgaon. This route, from the NH8 toll plaza to sector 55, has efficiently helped with the traffic issues in the city. To date, DLF has constructed 22 urban colonies in Delhi. Since 1985, they have constructed exceptional living and working spaces in 15 states and 24 cities!
DLF is not just famous for construction, it also title-sponsored the Indian Premier League in 2008. DLF had paid $2 billion for the 5-year sponsorship deal!
DLF going public
Moreover, in 2007, the company’s US$2 billion IPO was the biggest IPO in Indian history. According to the company's first-quarter results for the period ending 30 June 2007, its turnover was ₹31.2098 billion.
DLF’s preparation for REIT
DLF announced its plan to launch REIT in October 2020. DLF has plans to engage its rental arm DCCDL (DLF Cyber City Developers Ltd), with REITs. In a span of 15-18 months from now, DLF is going to be completely REIT-ready.
The company has combined JP Morgan and Morgan Stanley as investment bankers for the launch. The company aims at raising 6000 crores in the next two years through this decision.
DLF’s REIT will be used to fund office and retail projects. The company is going to use approx 25 million square feet of land which is currently leased out. The timing of the launch of the REIT by DLF depends upon interest rates and capital rates.
Let’s dig deeper into DLF’s commercial portfolio-
The commercial spaces of DLF lie in the most exotic IT hubs of India. Its commercial land is spread over a whopping 32.98 million sq. ft. area. Their tenants are among the fortune 500 companies and top MNCs.
🔼DLF’s commercial spaces
We have categorised DLF’s commercial spaces in different cities to take a quick tour of their workspaces, tenants, and area.
Delhi- DLF is home to DLF Tower and DLF Prime Tower in Okhla, South Delhi offers a great premium workspace with modern facilities. Well-known brands like MDH, Toshiba, Radius, and DHL are the tenants of this luxurious commercial area.
Noida- DLF tech park in Noida is a widespread 4 million sq. ft area. This exclusive workspace with ample modern amenities makes it a favorite place to work for many valued companies. In 2020, DLF had leased out 3.6 million square ft. of area for the data center of ST. Telemedia Global Centre of Singapore. This was probably the largest data center transaction in North India.
Chandigarh- DLF IT park in Chandigarh received the sword of honor award from the British safety council. It has many safety facilities like flood retention systems, and strict adherence to NBC (National Building Code) during fit-outs to all tenants so that they build their workspaces in a safe environment and are adhering to all safety norms. This space also includes a sporting facility, an ambulance facility and a PVR.
Chennai- DLF Cybercity in Chennai is 98% occupied by fortune 500 companies across R&D, design, and software companies. As Chennai is one of the first few cities that embraced the IT revolution, DLF has contributed to Chennai’s epic growth by building economic and global commercial spaces. With 45 acres wide integrated campus this luxurious space is a wonder.
Hyderabad- Located on a 25-acre green campus, DLF Cybercity Hyderabad has earned a LEED Platinum rating from USGBC. Featuring advanced sustainability features and robust services from both a functional and aesthetic perspective. It consists of 3 office blocks of approximately 3 million square feet each, with an abundance of parking. The floor plates are designed to meet the needs of a variety of businesses.
Kolkata- DLF I park 1 and I park 2 are interconnected blocks spread across 25 acres, with an amazing infrastructure, modern facilities, and comfort, to make working more feasible and enjoyable.
🔼Top Tenants-
All the commercial offices of DFL are equipped with well-known tenants like Accenture, Citibank, Cognizant, Google, IBM, TCS, Samsung, Genpact, etc.
🔼Occupancy rate and Vacant rate-
During the year 2018-2021, 88% of the office space developed by DCCDL in India was occupied. However, occupancy rates were above 94% in previous years. The economic impact of the covid-19 pandemic contributed to the decrease.
The vacant space of the company’s office portfolio decreased from 1.3 million sq. ft to 3.7 million sq. ft. in just one year. Again, the virus is to blame.
🔼Rental Payout-
Apart from the occupancy rate being decreased, the rental income of this company in the same year was 27.5 billion rupees.
These big numbers surely are a relief to the investors who are looking forward to investing in DLF REIT.
What makes REIT a safe option to invest in?
Ensuring higher returns on investments, REITs provide investors with a safe and diversified portfolio.Also, with SEBI rules in action, REIT investments have become even more safer. To ensure a robust property valuation system, the Securities and
Exchange Board of India (SEBI) instituted an annual valuation review by two other registered and authorized valuers with the addition of an independent party every six months. Additionally, REIT units' net asset values will be reported at least twice a year, which will reduce the chances of inconsistent fluctuations in values.
Come what may, REIT has opened a new door to investment opportunities. A gateway like Mutual funds, REIT has given commoners like us a chance to get a share of something virtually. DLF’s record over the past few years is proof that the REIT introduced by it is going to be a huge success, both for the real estate investors and also for the company.
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