Home / Companies / News /  Embassy-Blackstone postpones filing for listing of REIT till June

Bengaluru: Embassy Office Parks, the first to register a real estate investment trust (REIT) with the stock market regulator last year, has delayed its application for a listing till June, following uncertainty over including a key asset in the trust.

The asset in question is Embassy Golf Links (EGL), a 4.5 million sq. ft information technology park in Bengaluru, which has real estate firm Embassy Group and K.J George-controlled Kelachandra Group as partners. If included, the size of the REIT will be a significant 40 million sq. ft, with an enterprise valuation of Rs23,000 crore.

George, who is minister for Bengaluru development and town-planning, has not decided yet on including EGL in the REIT, delaying the application. Embassy Office Parks is an investment partnership between Embassy Group and global investor Blackstone Group Lp, besides other stakeholders who are all keen on an REIT.

The REIT portfolio will include a clutch of top rental assets, namely Embassy Manyata Business Park, a Four Seasons hotel and Embassy Tech Village in Bengaluru and Embassy Tech Zone in Pune.

“There has been some reconsideration and EGL could be part of the REIT. Discussions are going on. Whatever the outcome, the prospectus will now be filed only in late June," said a person familiar with the proceedings, who didn’t wish to be named.

In July 2017, Embassy Office Parks REIT was registered with the Securities and Exchange Board of India (Sebi).

K.J. George didn’t respond to calls. An Embassy spokesperson declined to comment.

REITs are listed entities that primarily invest in leased office and retail assets, allowing developers to raise funds by selling completed buildings to investors.

Norms for both REITs and infrastructure investment trusts (InvITs) were notified in September, 2014.

While no REIT is listed yet, two listed Indian InvITs have performed poorly.

Despite the overall slowdown in real estate, the commercial office sector has fared significantly better. Blackstone has strengthened its realty investment portfolio in India and crossed the $5 billion mark, across different asset classes including office, shopping malls and residential.

“Embassy is suitably placed as a front-runner and will enjoy the first-mover advantage. However, InvITs, the closest proxy to REITs, haven’t done well so far. For REITs, since it’s not standard capital market play, there has to be significant overseas investor interest, that will also factor in macro-economic risks and other available investment options," said Shashank Jain, partner, transaction services, PwC India.

In the past few years, Sebi has tweaked REIT rules several times, aiming to promote investments modelled along the lines of mutual funds in real estate.

For instance, Sebi has said that investment managers of REITs should project the fund’s revenues and property-wise operating cash flows for at least three successive years in offer documents. It also said that managers must disclose the details of assets that are proposed to be owned by REITs before the allotment of units is made in the public offer, as it seeks to make them more transparent.

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