NEW DELHI: India’s first Real Estate Investment Trust (REIT) launched last year—Embassy Office Parks REIT—has impressed investors with the yields its shares have returned, at least before the pandemic struck and the markets tanked in March this year. Now, India is set to see the second Initial Public Offering (IPO) of a REIT on Monday, with Mindspace Business Parks REIT proposing to raise up to Rs 4,500 crore through the listing.
The trust has so far brought in Rs 2,644 crore from anchor and strategic investors. A REIT owns, operates, or finances income-producing properties. Mindspace, according to reports, has brought 295 lakh square feet of office properties in cities such as Mumbai, Pune, Chennai and Hyderabad, of which the portfolio boasts around 245 lakh square feet of completed properties. Industry experts note that the rental income from such a portfolio is likely to be around Rs 1,200 crore.
Mindspace has fixed the price band for its public issue at Rs 274-275 per unit. Embassy had seen its share prices move from `328 in April 2019 to Rs 467 on March 6, 2020 (a rise of nearly 42 per cent) before tanking along with the rest of the market after the pandemic. The prices as of Friday are `366.71, still up by over 11 per cent.
But whether rents will remain as lucrative after the pandemic has catalysed a shift toward more work-from-home policies remains a question. “Despite global and domestic economic upheavals of 2018-19, India posted its highest-ever office space absorption for two consecutive years, clearly underlining a very strong occupier demand for its office buildings,” said Anurag Mathur, CEO, Savills India.
High returns
42% pre-COVID increase in Embassy REIT prices
11.8% Embassy REIT shares rise since April 2019
Mindspace has brought 295 lakh square feet of office properties