DLF restructures existing loans to lower interests, targets to save Rs 300 crore annually

NEW DELHI: DLF Ltd, the country’s biggest real estate developer, is restructuring existing loans with a target of saving Rs 300 crore annually, taking advantage of the benign interest rate environment, said a senior company executive.

The gross debt of DLF at the group level is close to Rs 25,000 crore and the company is looking at interest rate reduction of 120 basis points.

“In March 2020, most of our loans were at 9% interest rate, by December, we had reduced it to 7.5%,” Ashok Kumar Tyagi, whole-time director at DLF Ltd, told ET. “Our existing lenders are offering aggressive rates. We believe the average interest rate should be around 7.5%.”

“That’s almost translating to Rs 300 crore savings on an annualised basis,” Tyagi said.

The company, which operates nearly 35 million sq ft of grade A assets in the country, under its rental arm, DLF Cyber City Developers Ltd (DCCDL), is expected to take it to 40 million sq ft by December 2021.

While two properties that are already part of DCCDL will become operational soon, the company will also bring in three-four more assets that are currently under DLF.

“We continue to maintain significant reduction of overheads, enabling margin improvement in times ahead. Overheads outflow reduced by 35% in first half of financial year 2021. We expect to sustain this at levels for the fiscal,” Tyagi said.

“We have worked extensively to reduce the interest cost by negotiating for all our debt facilities across the group,” he added.

DLF has developed 153 real estate projects with a total area of about 330 million sq ft.

Nearly 40 million sq ft rental yielding commercial assets will be put under REIT by DCCDL, a joint venture between DLF and Singapore’s sovereign wealth fund.

The company will appoint an advisor soon and will be REIT ready in the next 12-15 months.

The company reported a 49% decline in net profit to Rs 228 crore for the quarter ended September, impacted by high fixed cost at a time when its operations had slowed down due to Covid-19.