Embassy Office Parks REIT IPO received a tepid response on the bourses on Monday, closing at ₹314.1 apiece on the BSE, up 4.7 per cent from its issue price of ₹300. A lot has been riding on India’s first real estate investment trust (REIT), which was listed at ₹312. The IPO was subscribed 2.58 times.
Backed by Blackstone and Bengaluru-based developer Embassy Property Developments, the IPO aimed to raise ₹4,750 crore by issuing shares in a price band of ₹299-300.
“REIT listing lacked lustre with tepid opening of lower single digit premium with anchor investors too having an entry cost of ₹300 a unit not giving much gains to them either. In hindsight it looks like still the confidence in real estate from institutional investors per se still looks bit laggard,” Parth Mehta, Managing Director, Paradigm Realty, said.
“We feel with improved transparency in real estate overall on back of strong policy changes and high quality assets... should show better interest levels in future listings,” Mehta said. The proceeds from the Embassy REIT IPO will be used for servicing debt and acquisition of Embassy One assets.
REITs allow investors to partly own real estate and get access to dividend-based income without directly investing large sums to buy a property. “The positive listing at 4 per cent premium demonstrates the demand for India’s maiden REIT,” said Shishir Baijal, Chairman and MD at Knight Frank India.
“REITs will allow greater participation from retail investors in the asset class. The commercial office space segment has been growing from strength to strength over the past few years and has transacted a record 47 million square feet in 2018 along with sustained growth in rentals across prime business districts. We expect this momentum to sustain in the near future which would encourage more participants to enter the REITs market, which in turn will improve the fund flow into the sector.”