Embassy Office Parks REIT IPO Opens Today; Should you Invest?

Embassy Office Parks REIT IPO, India’s first real estate investment trust (REIT), has planned to raise Rs 4,750 crore in Indian market.

The Embassy Office Parks REIT is actually a joint venture between the Bangalore-based property developer and private equity firm Blackstone. The  minimum investment in a REIT is of Rs 2-lakh

REIT had allocated units worth ₹876 crore to global investor Capital Group’s funds, that comprise of New World Fund, SMALLCAP World Fund, and Global Small Capitalization Fund at ₹300 apiece. The issue has raised Rs. 1,743 crore from anchor investors, that includes the participation of many foreign investors.

Embassy Office Parks REIT Profile

The company’s portfolio consist of approximately 33 million square feet of office space spread across four Indian cities, Bengaluru, Pune, Mumbai and Noida. This also includes strategic amenities, such as two completed and two under-construction hotels of aggregate 1,096 rooms, food courts, and employee transportation and childcare facilities.

The REIT’s portfolio has strong occupancy rate of 95% and more than 160 blue-chip tenants.

This IPO is expected to infuse further liquidity in commercial office space projects, Special Economic Zones (SEZs) and IT parks. The IPO will be beneficial to the developers, land bank owners along investment individuals who are not able to get hold of a whole asset

Embassy Office Parks REIT IPO Objective and Details

The net proceeds are planned to be used for the repayment/prepayment of certain Asset SPVs and the Investment Entity – INR3,710 crore, proceeds will also be used for the payment of consideration for acquisition of the Embassy One Assets currently held by EODPL – INR460 crore, Offer related expenses and General expenses of the corporate.

• Issue Open: March 18th, 2019 – March 20th, 2019
• Issue Type: Book Built Issue IPO
• Issue Price: Rs 299-Rs 300 Per Equity Share
• Market Lot: 400 Shares
• Minimum Order Quantity: 800 Shares
• Non Institutional Investor Portion: 25%
• Listing At: BSE & NSE
• Listing Date: April 3rd, 2019

Should you Invest?

The company for the nine months of FY 19 has reported the revenue of INR 1493.2 crore and had posted the topline of INR 1766.3 crore. The company has reported the net profit during nine months of FY 19 of INR 285.1 crore versus INR 14.5 crore in FY 18.

Meanwhile, the five-year return from commercial real estate assets in India is at 14 per cent, versus a 10 per cent return in 2017 in Canada and about 8 per cent to 10 per cent in the United Kingdom (UK).

This IPO is one of the largest in 2019. The investors that are risk averse may “subscribe” to Embassy Office Parks REIT IPO.