Embassy Office Parks REIT plans to raise Rs4,750 crore in India IPO
1 min read.Updated: 12 Mar 2019, 03:50 PM ISTCrystal Tse and Anto Antony, Bloomberg
The Embassy Office Parks REIT will offer as many as 158.6 million units at ₹299 to ₹300 apiece
The REIT will start taking orders from anchor investors on Friday before moving on to a public offering on 18 March
Hong Kong/Mumbai: Embassy Office Parks REIT, backed by Blackstone Group LP, plans to raise about Rs4,750 crore ($682 million) in India’s first real estate investment trust listing.
The REIT, which includes Embassy Group properties, will offer as many as 158.6 million units at ₹299 to ₹300 apiece, according to terms for the deal obtained by Bloomberg. It will start taking orders from anchor investors Friday before moving on to a public offering 18 March through 20 March, the terms show.
A successful listing of the REIT, expected by 3 April according to the terms, will potentially open a fundraising avenue for India’s cash-starved property companies. The nation’s real estate developers are struggling with sluggish sales and price declines that followed a 2016 crackdown on cash as well as new consumer protection and tax policies. A cash crunch at shadow lenders following defaults at Infrastructure Leasing & Financial Services Ltd. also curtailed availability of capital to developers.
“Considering the rough patch that the real estate sector is going through, there is a lot riding on this sale," Sandeep Upadhyay, managing director at Centrum Capital Ltd. “If there is enough demand for this issuance we will see more REITS tapping the market over next one year."
The trust’s portfolio comprises about 33 million square feet of office space across four Indian cities, Bengaluru, Pune, Mumbai and Noida, a regulatory filing shows. Its Express Towers property, located in Mumbai’s central business district, counts Wells Fargo & Co., Warburg Pincus as well as Blackstone as tenants.
Strategic investors agreed to subscribe to ₹876 crore of units in the deal, the terms show. Morgan Stanley, Kotak Mahindra Bank Ltd., JPMorgan Chase & Co. and Bank of America Corp. are global coordinators for the offering, a filing showed.
REITs have been in the making for several years in India, as the regulator kept tweaking rules to make it more attractive to developers and investors. Retail investors may still remain wary of these products after the much-hyped infrastructure investment trusts failed to meet market expectations. IRB InvIT Fund has fallen more than 16% while India Grid Trust has gained just 1.1% since their trading debut in 2017.