Embassy Office Parks real estate investment trust (REIT) was registered with the Securities and Exchange Board of India (Sebi) on Friday, making it the first such realty trust in the country to be accorded registration by the market regulator.
Embassy Office Parks, which includes a clutch of marquee office parks, namely Embassy Manyata Business Park and Embassy GolfLinks in Bengaluru, is an investment partnership between Embassy Group and global investor Blackstone Group Lp, along with other stakeholders.
Embassy had applied to Sebi for approval to register its REIT in October 2016. The application was to list a $600 million REIT, which would include more than 20 million sq. ft of office assets, concentrated in southern India, Mint had earlier reported.
The Blackstone-Embassy REIT is likely to enjoy a first-mover advantage and grab the attention of investors, said analysts.
“Now that it is registered, we will start roadshows for investors," said Jitu Virwani, chairman and managing director of Embassy Group.
A Blackstone 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.
Blackstone, owner of the largest portfolio of office assets in India, has invested more than $2.8 million in real estate projects in the last decade or so.
Sovereign wealth fund Qatar Investment Authority-backed RMZ Corp. and K Raheja’s commercial office assets, in which Blackstone picked up a minority stake earlier this year, are both potential candidates for REITs.
Abhishek Goenka, partner at PwC India, said that the first REIT listing will be important for the industry. Once it is registered, there is a three-year window to make the offering or launch it.
“The success of a new product depends on the strength of the enterprise which is making the offering. In this case, Embassy is a good example of a firm which has a admirable track record. How the REIT will be accepted by investors, we have to wait and watch. But it’s a good time to test the market," added Goenka.
In the past eight years, Sebi has tweaked the REIT rules several times, aiming to promote investments modelled along the lines of mutual funds in real estate.
In December, Sebi 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 its offer documents. The regulator also said that the 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 the security vehicle more transparent.