India’s first share sale of a property-collection under one operator, Embassy Office Parks REIT, has become the country’s second-most valuable real estate company on its stock-market debut. Analysts believe that there is scope for immediate further appreciation that will eventually be instrumental in making REITs a favorable with the uber-rich in New York, Singapore or London.
After gaining as much as 8 percent to Rs 324.50, compared with the offer price of 300, the REIT units ended at Rs 314.10, up 4.7 percent. As on Monday, Embassy REIT was valued at Rs 24,238 crore, bettered in the property space only by DLF which has a market capitalization of Rs 38,474 crore.
The Rs 4,750 crore public issue, which opened for subscription during March 18-20, was subscribed 2.57 times at the end of the three-day bidding process.
“The units are currently trading at a 20 percent discount to the total NAV of Rs 375, based on the current market price of SPV projects,” ET Realty quoted Anil R, analyst, Geojit Financial Services, as saying. “The company has invested in India’s key office markets of Bengaluru, Pune, Mumbai and Noida and these markets have exhibited strong dynamics…(High) absorption and constrained supply have resulted in high rental growth and low vacancy.”
REIT IPO launch is being deemed as marquee and landmark deal by the experts. Good response from the investors and the encouraging listing of the Embassy REIT will pave the way for similar sales by real estate companies that have substantial portfolios of rent-yielding assets. No wonder, the experts are predicting that a slew of REITs will hit the market in the coming months.
“The ability to raise resources through the monetization of rent-yielding properties at a relatively attractive cost is a re-rating trigger for not only the REIT issuing real estate companies but also a boost for investor sentiment toward the entire sector,” the publication quoted Gaurav Dua, head of research, Sharekhan.