Mumbai: The initial public offering (IPO) of Embassy Office Parks REIT, India’s first REIT to be listed, was fully subscribed on Wednesday, the last day of the three-day initial share sale, data from the stock exchanges showed.
As of 5.30pm on Wednesday, the Embassy REIT IPO was subscribed 2.58 times, with institutional investors subscribing 2.15 times of the portion reserved for them. The portion reserved for high net-worth individuals and retail investors was subscribed 3.1 times. The IPO, which opened on 18 March, was subscribed 47% on Tuesday.
On 15 March, the REIT had raised ₹1,743 crore by allocating units to institutional investors as part of its anchor book allocation, stock exchange data showed.
The anchor book is that part of an IPO which bankers can allot to institutional investors on a discretionary basis. These subscriptions open a day before the launch of an IPO and are seen as a gauge of institutional investors’ interest.
A Real Estate Investment Trust (REIT) is an investment vehicle that allows people to invest in real estate and hold properties under it, and then lease it out to earn rental income. In India, REITs are only allowed for holding commercial properties.
The Embassy Office Parks REIT IPO, backed by global private equity firm Blackstone Group LP and Bengaluru-based developer Embassy Property Developments Pvt. Ltd, aimed to raise ₹4,750 crore by issuing shares at ₹299-300 apiece.
Funds of investors such as Fidelity International, Capital Group, TT International and Schroders, among others, bought the REIT’s units.
On the domestic side, the anchor book saw participation from Kotak Mahindra Life Insurance Co. Ltd and the family office of Radhakishan Damani, the promoter of Avenue Supermarts Ltd, which runs the D-Mart chain of supermarkets.
Embassy REIT’s portfolio comprises about 33 million sq. ft of office space across seven office parks and four prime city-centre office buildings as on 31 December. It includes strategic amenities, such as two completed and two under-construction hotels totalling 1,096 rooms and food courts, besides employee transportation and childcare facilities.
The REIT’s portfolio has an occupancy rate of 95% and more than 160 blue-chip tenants. Office properties that are part of the REIT IPO, include the Express Towers at Nariman Point in South Mumbai and First International Finance Centre in the Bandra-Kurla Complex.
The successful listing of the Embassy Office Parks REIT could pave the way for more such offerings by real estate companies with large commercial portfolios.
Mint had reported in November 2017 that Bengaluru-based real estate developer RMZ Corp., which is backed by sovereign wealth fund Qatar Investment Authority, was in talks to list its commercial assets under the REIT structure, to raise over ₹2,000 crore.
In 2014, the Securities and Exchange Board of India (Sebi) had amended the Sebi (Real Estate Investment Trusts) Regulations, 2014, (REIT Regulations), which allowed them to issue debt securities apart from raising equity. The amendment was part of the government’s move to revamp the real estate sector by allowing more investor participation.
“The listing of India’s first REITs was one of the most awaited events for the real estate sector as it has taken over a decade and half to come to fruition. The over subscription of REITs is, therefore, a very encouraging sign for the real estate sector at large, and especially for the commercial segment. This is not just India’s first REITs offering, but also the largest in Asia," said Shishir Baijal, chairman and managing director, Knight Frank India.