Real Estate Investment Trust: Indian realty sector expecting immense money pumping from 'Embassy REIT'
A successful REIT listing would further prompt the entry of other asset-holding companies to issue their own offerings, thereby widening the REIT market size.
Marking a major milestone in the Indian real estate sector, ‘Embassy Office Parks’, a joint venture between the real estate company Embassy and private equity firm Blackstone has launched the country’s first Real Estate Investment Trust (REIT). Termed as ‘Embassy REIT’, the trust has issued up to 158 million units at a price of Rs 300 per unit aggregating up to Rs 4,750 crores. The key stakeholders of the ‘Embassy REIT’ includes Axis Bank (the trustee), Embassy Office Parks (the manager), Embassy (the sponsor) and Blackstone (the sponsor). The Embassy REIT has already raised Rs 876 crores from strategic investors which include SmallCap World Fund, New World Fund, amongst others and Rs 1,743 crores from anchor investors, which include Capital group, Citigroup and Wells Fargo, amongst others.
Speaking on the developments in regard to REIT, Anshuman Magazine, Chairman and CEO, India, South-east Asia, Middle East and Africa at CBRE told Zee Business online, “India offers major advantages for REIT including availability of a wide variety of quality assets, sustained government support in easing regulations, a wide investor base, and opportunities for capital appreciation, among others. Hence, it is likely that India's first REIT will be successful and will help elevate investor sentiments in the country’s real estate market." He said that the improved investor sentiments in office assets are likely to generate a potential fundraising avenue for developers and also propel major corporations to lease or purchase space in quality buildings. While the office sector is expected to dominate REIT listings initially, it is expected to be followed by retail and logistics sector in the long-run, thereby opening up avenues for the real estate sector at large.”
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Standing in sync with Anshuman Magazine; Rami Kaushal, MD-Consulting and Valuation services at CBRE India said, “A successful REIT listing would further prompt the entry of other asset-holding companies to issue their own offerings, thereby widening the REIT market size. The take-off of REIT in India is also expected to open a new investment avenue for retail investors by allowing them to invest in the commercial property market with a minimum amount of just Rs 2 lakh – which is much more feasible than investing in a physical asset.
The property portfolio of Embassy Office Parks in India comprises of seven best-in-class office parks and four prime city-center office buildings adding to a total leasable area of 32.7 million sq. ft. The portfolio is spread across the best-performing markets in the country such as Bengaluru (17.2 million sq. ft.), Pune (8.9 million sq. ft.), Mumbai (2.1 million sq. ft.) and Noida (4.7 million sq. ft.). Additionally, the portfolio also comprises of two operational hotels, two under-construction hotels and one operational solar park.