India’s first REIT (real estate investment trust), Embassy Office Parks REIT plans to raise Rs. 4,750 crore from market.
The REIT will open for subscription on March 18 and the bid process will close on March 20. The unit price for investment will be determined by the book building process.
Embassy Office Parks is a joint venture between Blackstone Group and Embassy Group. It holds around 33 million square feet of commercial properties spread across four metro cities Bengaluru, Mumbai, Pune and Noida. Currently it has leased 95% of its total properties of which, 43.4% have been rented to Fortune 500 companies.
In December 2018, the portfolio had generated Rs. 1,611 crore of revenue from operations. It is expected to grow by 55.8% by FY2023, said the draft document.
A REIT essentially invests in rent yielding properties. As per SEBI regulation, they need to distribute at least 90% of the rental income among investors. By investing in a REIT, the investor earns rental income and capital appreciation from increase in price of assets. Investors have to invest a minimum of Rs. 2 lakh in the REIT.
According to the document, India’s office real estate market offers 7.5%-8.5% yield.
Of the total sale offer, the Embassy Office Parks has allocated Rs.3900 crore for retail and institutional investors.