INSUBCONTINENT EXCLUSIVE:
New Delhi: Global investment company Blackstone and realty firm Embassy Group Monday filed its offer document with markets regulator Sebi to
launch the country's first real estate investment trust (REIT) to raise over Rs 5,000 crore.
Embassy Office Parks, the joint venture firm
of Blackstone and Embassy, has filed the draft red herring prospectus (DRHP) with the regulator to launch REIT, which would be Asia's
largest in terms of portfolio size of 33 million sq ft, sources said.
The JV firm proposes to raise over Rs 5,000 crore through its REIT,
with an option to raise further 25 per cent, they said
The issue is likely to hit the capital market this fiscal, depending on the regulatory approvals and market conditions.
Securities and
Exchange Board of India (Sebi) had notified REIT's regulations in 2014, allowing setting up and listing of such trusts, which are very
popular in some advanced markets
However, not a single REIT has been launched and listed so far.
REIT is an investment tool that owns and operates rent-yielding real estate
It allows individual investors to make investment in this platform and earn income.
According to sources, Embassy Office Parks, a leading
player in commercial real estate, has put 33 million sq ft of office and hospitality assets under its proposed REIT comprising of 7 business
parks and 4 city-centric buildings spread across Mumbai, Bengaluru, Pune and Noida.
Out of 33 million sq ft, about 24 million sq ft area is
operational at 95 per cent occupancy and yielding rental income of over Rs 2,000 crore annually
Another 3 million sq ft area is under construction and 6 million sq ft area in pipeline.
Embassy Office Parks' rental income is expected to
rise by 55 per cent in the next 3 years as it expects to lease area at a higher rent
Presently, its office spaces are leased at 35 per cent lower than the market rental and the same would be be revised while renewing the
lease agreements with the clients.
The JV firm has top MNC clients in its commercial projects
More than 50 per cent of the rents come from Fortune 500 companies
Clients such as Microsoft, Google, Wells Fargo, JP Morgan etc have their base in the office parks.
The proposed REIT has an ability to bring
in more assets, either inorganic or developed by Embassy to the tune of another 50 million sq ft in the next few years, sources said
The proposed REIT will have first right of refusal to acquire commercial projects developed by Embassy Group and it can buy properties of
other developers as well.
Embassy Office Parks had last year registered its REIT with Sebi, sponsored by Blackstone and Bengaluru-based
Property consultant CBRE is the valuer of this proposed REIT.
Unlike housing segment, the commercial real estate sector is doing well and
attracting huge investments from domestic and global investment firms
The rising demand for co-working space is also fuelling demand for office properties.
Apart from Blackstone-Embassy, India's largest
realty firm DLF is a major player in commercial real estate with a portfolio of over 30 million sq ft and a rental income of about Rs 3,000
Singapore's sovereign wealth fund GIC has invested Rs 9,000 crore in December last year in DLF's rental arm.
Brookefield, Canada Pension
Plan Investment Board (CPPIB), Ascendas and Qatar Investment Authority are also investing in commercial real estate.
Many real estate
developers have made plans to create a strong portfolio of commercial real estate
The success of Blackstone-Embassy group's REIT will further strengthen this trend
