What is the synergy of DLF group acquiring Fairleaf Real Estate?

The Delhi based DLF, is part of the Kushal Pal Singh group, which is the largest real estate developer based out of India. Now, the DLF Group's rental arm, DLF Cyber City Developers Limited or DCCDL has acquired 51.8% stake in Fairleaf Real Estate Private Limited for a consideration of Rs.780 crore. Incidentally, just a couple of years ago, DCCDL had sold a stake in the business to the Singapore based Government Investment Corporation.

DCCDL has now completed the acquisition of this 51.8% stake and paid a consideration of Rs.780 crore for the same. As a result of this deal, Fairleaf has become a wholly-owned subsidiary of DCCDL with immediate effect. There is an interesting background to this deal which needs to be understood as to how the deal actually came about.

In December 2020, DCCDL had entered into a share purchase agreement with funds managed by Hines Group for acquiring their stake in Fairleaf Real Estates. Hines has been the owner and operator of One Horizon Centre in Gurugram, a premium and high profile property based out of DLF Phase 5.

One Horizon Centre is an iconic asset which forms a part of the larger mixed-use development in one of the most reputed and sought after locations at DLF 5 in Gurugram. It has a leasable area of 8.13 lakh SFT, offering top quality and premium office spaces combined with complimentary retail space.

At that point of time, Hines owned 52% stake in One Horizon Centre at Gurugram while the balance 48% stake was held by DCCDL, the commercial property holding company unit of DLF Group. Subsequently, DCCDL exercised the first right of refusal to acquire the stake of Hines. The acquisition is still subject to basic terms and conditions and the entire contours of the deal are expected to be complete by the first quarter of FY22 ending Jun-21.

DLF, in Dec-17, had entered into this joint venture with GIC when DLF promoters had hived off their entire 40% stake in DCCDL for Rs.12,000 crore. At that time, the deal included sale of 33.34% stake in DCCDL to GIC for Rs.9,000 crore and buyback of balance shares by DCCDL. DLF currently holds 66.66% stake in DCCDL with GIC of Singapore owning the rest