Choice Broking has come out with its report on Embassy Office Parks REIT. The research firm has recommended to "Subscribe" the IPO in its research report as on March 16, 2019
Located in India, a leading services hub for global corporates
Best-in-class office properties with high quality infrastructure • Occupied by a diversified, high quality, ‘sticky’ multinational tenant • Simple business with embedded growth
Strategically located in top-performing markets with high-entry barriers • Highly experienced management team
Renowned Sponsors with global expertise and local knowledge
Valuation and Outlook
Generally, REITs are less volatile as compared to other investment instruments like equities, mutual funds and various commodity classes. The reason might be its structure of investing around 80% of the assets in rent generating assets. With more institutional investors like PE funds and sovereign wealth funds showing interest in the domestic commercial real estate - this demonstrates the growth potential in the sector. Thus, this REIT should witness a good demand from the risk averse financial institutions/investors. • Since this is new instrument and untested, it will take time to evolve. Already the investors in the past have burned their fingers with their investment in two listed InVITs, which are trading below the issue price. Due to poor performance, the yield expectation has gone upto 12-13% for these InVITs. Thus it will take time to displace investors from other instruments to this investment instrument. • With best in-class infrastructure and presence in high growth market, EOP would continue to demand premium rentals. This coupled with low office vacancy, professional management; growth in the sector along with transparent & accountable structure would mostly appeal the investors. Thus considering the above observation, we assign a “Subscribe with Caution” rating for the issue
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