Real estate majors sell off non-core assets to reduce debt burden
There is a trend with the realtors which is visible for the last couple of years. Real Estate sharks like DLF and HDIL are trying to sell off their assets and pay off their debts, increase liquidity and pay less interest on debts. Bangalore-based Puravankara Projects also wants to reduce the debt burden, but by paying from its internal accruals and cash received from sales of new project launches, not by selling their asstets. Ashish Puravankara, joint MD, Puravankara Projects mentioned that they are estimating to raise Rs 1,000 crore in 2014-15 and pay it off for debt clearance.
The country’s largest developer DLF’s CFO at DLF Ashok Tyagi mentioned that they are looking at offloading their non-core assets and keep the debt levels at the existing levels. They are looking at tactical divestments and keeping a tab on capital expenditures and land related charges. This will help the debt to remain under control. The firm also hopes that there will be a downward revision of interest rates which will save money in interest payments and add to the company’s top line.
As of March 31, 2014, the company’s net debt stood at Rs 18,500 crore. They are not anticipating in any sudden surge in sales volume in most of the geographies, and Tyagi stated that the continued sales at a moderate pace similar to 2013-14 is beneficial for the company. Slowly selling non-core assets and paying off the debts has been a prime focus for this realty company for the last couple of years.
The funds raised from the sales of Amanresorts chain of luxury resorts (A part of DLF then) for Rs 2,230 crore was used to reduce the debt burden for the firm. Rajeev Talwar, the executive director of DLF also mentioned that all the land parcels owned by DLF will not be converted into residential/commercial establishments. Business Analysts mentioned that many realty firms including Unitech which are stressed are looking at monetising land parcels to reduce their respective debts and bring down interest costs.
Source- Financial Chronicle
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