Why is DLF Ltd, the real estate major, want to raise funds through debentures at this point of time?

Gurugram based DLF, which is currently India’s largest private sector real estate developer, has laid out elaborate plans to raise Rs.395 crore through the issue of debentures. The final approval will only happen subsequent to the proposal being discussed at a meeting of the finance committee of the board of directors on 03-March. It is still not too clear how the proceeds of the bond issue will be utilized by DLF.

The instrument will be listed redeemable secured non-convertible debentures of total value of Rs.395 crore and this could be raised either in a single tranche or in multiple tranches. The modalities will be worked out only in the meeting of the finance committee. These funds are likely to be utilized in a slew of housing and commercial property development plans across India.

DLF currently possesses a portfolio of around 35 million SFT of commercial properties. These properties earn annual rental income of around Rs.3,500 crore for DLF and this excludes the residential housing projects that DLF is involved in. These residential projects are only sold by DLF after completion, which is part of their strategy.