Intra-day, India's first Reit rose as much as 8.3% before ending 4.7% higher at Rs 314.10 on the bourses
Embassy Office Parks, India's maiden Real Estate Investment Trust (Reit), received a positive response from the market on debut. The country's first Reit is a joint venture between global investment company Blackstone Group LP and Bengaluru-based Embassy Group. In the wake of a strong appreciation on listing day, other Reit's are also waiting in the wings for their maiden listing.
On Monday, the share price of Embassy Office Parks Reit climbed as much as 8.3% intra-day before trimming gains to still end 4.7% higher at Rs 314.10 on the bourses. Embassy's initial public offering was oversubscribed over two-and-a-half times and the JV raised Rs 4,750 crore.
Portfolio of Embassy Office Parks comprises seven office parks and four prime city-centre office buildings with total office space of 32.7 million square feet.
About the Reit's future, an industry player told DNA Money that "Many Reits will follow now. Singaporean sovereign wealth fund GIC's Reit will not be next in line, but at some point of time, they will. There are four to five in the works. Blackstone themselves have three to four Reits in line."
The Reits in the pipeline include four real estate players where Blackstone has tied up. These Indian entities include Pune-based Panchshil, Mumbai's K Raheja Corp, Indiabulls Real Estate and Hyderabad's Salarpuria Sattva Group.
In the last few years in India's realty sector, Blackstone has come up as the most aggressive institutional investor. This is evident from the fact that it has been acquiring several real estate assets across the country and has the biggest portfolio of income-producing office spaces.
It's not just Blackstone, but also Brookfield Asset Management, GIC Pte, Canada Pension Plan Investment Board, Qatar Investment Authority and Ascendas-Singbridge who have been aggressively investing in this sector.
Following the success of Embassy Office Parks Reit, HDFC chairman Deepak Parekh said that two to three companies have already approached the mortgage lender to be an investor for such issues over the next 12 months.
"Reits are a good instrument class but not well understood here. Assets in Reits assure yields and after three years there is an increase in rentals. Therefore, there is more value and more capital appreciation," said Parekh.
This latest product, which is also available in several countries across the world, in India offer investors guaranteed returns of 8% to 8.50%. The returns also increase annually apart from a capital appreciation of the assets the Reits hold.
However, a recent report on Reit had stated that GIC Pte, as well as Canada's Brookfield Asset Management, may not float their Reit in the near term as they want to adopt a wait and watch methodology before proceeding ahead with their plans.
MAKING A MARK
- Rs 4,750 cr – The JV raised from the IPO
- 32.7 million square feet – Total office space portfolio
- 8.50% – Investors to get returns from investment in Reit
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