DLF may delay REIT launch due to adverse market conditions

Real estate company DLF is likely to delay the launch of its REIT due to the change in market scenario with the rising interest rates.

The firm has been getting ready for the launch of its real estate investment trust (REIT) since last 18 months. The chief executive Ashok Kumar Tyagi confirmed they will launch its REIT when market circumstances are proper, reported Economic Times.

"There is no change in the plan or the direction. Both GIC and us are reasonably committed to the launch, but given the high interest rates, current market conditions, and the overall uncertainty, this obviously is not the best time for a new REIT," the report said quoting Tyagi.

DLF reported a net profit of Rs 487 crore on October 21, reflecting a 28 percent increase on a year-on-year basis. The company clocked new residential sales bookings of Rs 2,052 crore, reflecting a YoY growth of 36 percent. Cumulative new sales for H1FY23 stand at Rs 4,092 crore, in line with our guidance, the company said.

During the analysts’ call in the previous quarter, DLF had said that it will be REIT ready in the next couple of months after completion of a majority of the preparatory work.

Last year in January, the realty major’s rental arm DCCDL had appointed Shardul Amarchand Mangaldas & Co as legal advisor, Morgan Stanley as banker and KPMG as financial/tax advisor, to prepare itself for the launch REIT but had said that the timing of the public issue will be decided by its shareholders.

In India, there are three listed REITs -- Embassy Office Parks REIT, Mindspace Business Parks REIT and Brookfield India Real Estate Trust.

In September, Blackstone Inc was slated to sell 7.7 crore units of Embassy REIT worth Rs 2,650 crore through block deals, CNBC Awaaz reported citing sources.

REIT, a popular instrument globally, was introduced in India a few years ago to attract investment in the real estate sector by monetising rent-yielding assets. It helps unlock the massive value of real estate assets and enable retail participation.