Latest News | Embassy Office Parks REIT Outperforms BSE Realty Index: Anarock
Get latest articles and stories on Latest News at LatestLY. Embassy Office Parks REIT, the only Real Estate Investment Trust listed on stock exchange, has given 14 per cent return since April last year, and outperformed BSE realty index, according to property consultant Anarock.
New Delhi, Jul 5 (PTI) Embassy Office Parks REIT, the only Real Estate Investment Trust listed on stock exchange, has given 14 per cent return since April last year, and outperformed BSE realty index, according to property consultant Anarock.
The REIT, a popular instrument globally, were introduced in India a few years ago aimed at attracting investment in the real estate sector by monetising rent-yielding assets.
It helps unlock the massive value of real estate assets and enable retail participation in the development of the nation.
India's first REIT Embassy Office Parks, launched by global investment firm Blackstone and Bengaluru-based realty firm Embassy group, got listed on the stock exchanges in April 2019 after raising nearly Rs 5,000 crore through a public issue.
"From its inception leading up to 25th June 2020, Embassy Office Parks REIT has yielded 14 per cent returns, which is higher than the returns generated by BSE Realty Index," Anarock Capital MD & CEO Shobhit Agarwal said in a report.
The return on BSE Realty index stood at minus 20 per cent during this period, the consultant said.
As of June 26, 2020, Embassy REIT's market capitalisation was around USD 3.45 billion (17 per cent of the listed real estate stocks' market capitalisation in India), the report said.
"Despite the markets being in a turmoil over the past several months - further exacerbated by the COVID-19 outbreak which impacted businesses and stock markets alike - the REIT market opportunity is still significant and also still largely untapped in India," Agarwal said.
He said the top seven major cities of the country have about 550 million sq ft of Grade A office supply, of which 310-320 million sq ft area are REIT-able.
In India, market regulator Sebi introduced draft rules, partnered with several stakeholders, and enacted the REIT regulations in 2014.
Between 2014 and 2016, the rules were revised several times to address concerns, primarily related to double taxation.
In 2014, the sponsors of REITs were given a tax deferral to transfer the shares of the special purpose vehicle (SPV) to business trusts in consideration for units. Taxation was deferred until the sale of units.
In 2015, minimum alternate tax (MAT) deferral was also introduced, while dividend distribution tax (DDT) exemption was provided at the SPV level in 2016.
"The regulator has been instrumental in the success of the REIT vehicle in India, crafting a robust process and efficient mechanism to ensure transparency and generate interest from institutional investors," Agarwal said.
The consultant said that India's maiden REIT has paved the way for many others to follow suit.
"We are witnessing consolidation of portfolios and good quality office assets are exchanging hands. Several developers and owners of commercial office real estate are in various stages of preparing for the listing," he said.
However, Agarwal said the COVID-19 outbreak has slowed down activity, with global investors carefully watching the emerging WFH (Work From Home) trend that may shrink office space requirements.
"With another realty major K Raheja Corp now gearing up to announce REIT listing, India is better positioned than ever before and there is considerable incentive for making the proposition even more attractive," Agarwal said.
Indian REITs are still at a nascent stage with immense potential even in other asset classes, such as retail, warehousing and residential real estate, going forward, the consultant said.
Across the world, some of the largest REITs own property types such as telecommunication infrastructure, industrial (distribution centres, warehouses, etc.), data centres, retail malls, healthcare facilities, commercial offices, residential projects and several other assets.
(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)