Embassy Office Parks REIT, which is backed by Blackstone Group, plans to raise about Rs 4,750 crore ($682 million) in what would become India's first real estate investment trust listing.
According to the terms of the deal obtained by Bloomberg, the REIT, which includes Embassy Group properties, is willing to offer as many as 158.6 million units at Rs 299 to Rs 300 apiece. The terms also show that it will start taking orders from anchor investors on Friday before moving on to a public offering March 18 through March 20.
Per Sandeep Upadhyay, who's currently the managing director at Centrum Capital, "Considering the rough patch that the real estate sector is going through, there is a lot riding on this sale. If there is enough demand for this issuance we will see more REITS tapping the market over the next one year."
Expected to come by the 3rd of April based on the terms, a successful listing of the REIT is seen as a bridge that may potentially open a fundraising avenue for the numerous companies in India, which, at the moment, is most-likely cash-starved. That's because following a 2016 crackdown on cash as well as new consumer protection and tax policies, the nation's real estate developers have been struggling with more-than-average sluggish sales and steadily declining prices, which overall, doesn't bode well for everyone in the business that's involved. Furthermore, a cash crunch at shadow lenders, which followed defaults at Infrastructure Leasing & Financial Services Ltd. also further minimized capital availability to developers, adding to the problem.
India's first-ever real estate trust listing
According to a regulatory filing, the trust's portfolio comprises about 33 million square feet of office space. This then spans to about four Indian cities, including Bengaluru, Pune, Mumbai, and Noida. In fact, ts Express Towers property, which is located in Mumbai's central business district, counts Wells Fargo & Co., Warburg Pincus, and Blackstone as building tenants, showing just how big and expansive the portfolio really is.
Lastly, the terms show that strategic investors all collectively agreed to subscribe to 8.76 billion rupees of units in the deal. Among the global coordinators are Morgan Stanley, Kotak Mahindra Bank Ltd., JPMorgan Chase & Co. and Bank of America Corp., to name a few.
The portfolio has been in the making for several years now, with the regulator tweaking and re-tweaking it again just to make sure all needs are met, and that all of the rules are attractive to developers and investors.
