After it outsourced a
large portion of its construction work past year to focus on real estate
development, DLF Lyd has now decided to outsource the management of all its
properties to 3rd party property management Companies.
It is close to
signing a contract with Cushman & Wakefield (C &W) and Jones Lang
LaSalle (JLL) to manage its commercial and retail spaces.
Both have specialised
divisions that manage property for many developers. The 2 companies along with
Knight Frank have also bagged the contract to manage some of DLF Ltd's
residential property.
Property Management..!
Property management
in India is a Rs.1,000 crore business.
"The aim is to
focus on DLF Ltd's core competency of real estate development. This would free
up valuable management bandwidth," said a person close to the development,
who did not wish to be named.
Property management
involves operation & maintenance of a building, engineering services,
security, energy management and sustainability practices alongside softer
services such as reception, landscaping etc. DLF Ltd, C & W, JLL and Knight
Frank declined to comment for the story.
The real estate major
has 2.37 crore square feet of commercial and retail of space in the National
Capital Region & outside.
C & W will manage
the assets in Hyderabad & Chennai while JLL will manage those in Kolkata
& Chandigarh.
Buildings in Gurgaon
will be equally divided between the two. C & W will also manage the 3 retail assets in
Delhi - DLF Promenade and Emporio at
VasantKunj and DLF Place at Saket.
In residential space,
it is currently outsourcing about 70 lakh square feet, which includes buildings
such as Icon and Pinnacle in Gurgaon.
These assets are
critical for the real estate developer / promoter as rentals from them are
close to Rs. 2,000 crore of its revenues every year. This money services
interest on over 50 % of the firms's
debt that stands at above Rs. 21,000 crore.
While DLF Ltd has
outsourced this work, it will continue to be the interface for clients in its
office buildings & retail malls
through an in house customer relation team.
The rest of the team
of DLF Ltd, which managed all these properties, will be transferred to C &
W and JLL..
DLF Ltd will also
manage its fire services for these properties on its own as it has spend a
considerable amount of money in the last one year to set up a private fire
station and acquired 90 metre tall hydraulic platforms that will be used for
tall buildings.
In a similar move
past year, the firm had decided to outsource a large portion of its
construction work to companies like as L & T and Shapoorji Pallonji to
focus on its core competence. This was also aimed at helping the company speed
up execution in many of its projects and lead to better cash management.
The fire has been
trying to reduce its massive debt of over Rs, 21,000 crore by selling non-core
assets. In the past 1 year, it has sold its NTC Mill land in Mumbai to the
Lodha Group for Rs. 2,727 crore, has agreed to sell its luxury hotel chain Aman
Resorts to its original owner Adrian Zecha for Rs. 1,650 crore & a part of
the wind power business for Rs. 282 crore to Bharat Light and Power.
This will bring down
the company's debt to Rs, 18,500 crore by end March 2013. It is also in the
process of raising another Rs. 2,000 crore by selling 4.7 % stake in the company
through the institutional placement programme to meet the market regulator
SEBI's June 2013 deadline of minimum 25 % public float. This is expected to
further bring down the fiirm's debt to Rs. 16,500 crore.
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