Asia’s biggest and India’s maiden REIT issue -- Embassy Office Parks REIT IPO -- saw cautious investor demand on day 1, with the issue getting subscribed 20% at the end of the bidding on day 1.
Asia’s biggest and India’s maiden REIT issue — Embassy Office Parks REIT IPO — saw cautious investor demand on day 1, with the issue getting subscribed 20% at the end of the bidding on day 1. The Rs 4,750 crore issue saw bids for 1.39 crore shares as against the issue size of 7.15 crore shares, implying a demand of about 20% of the reserved portion.
Institutional investors bid for a total of 1.15 crore shares implying 30% demand of the reserved portion. Other investors — which includes corporations as well as individual investors, collectively bid for a total of 23.84 lakh shares, implying a total subscription of about 7%. Overall, the issue has been subscribed about 20%, stock exchanges data showed.
Blackstone and Bengaluru-based Embassy Office Parks are looking to raise Rs 4,750 crore from the IPO. The issue opened for subscription today, and closes on 21st March 2019. The firm has set a price band of Rs 299-300. The firm has set a bid lot of 800 units and in multiple of 400 units thereafter. Therefore, the minimum bid amount is Rs 2,39,200 to Rs 2,40,000.
Investors are understandably cautious, given that this is a new kind of an investment option. “One should be very cautious while investing as it is a first-time investment,” Parth Mehta, Managing Director, Paradigm Realty, said in a note. However, industry experts agree that the new investment vehicle, REIT, will provide a boost to the real estate sector in India.
Nevertheless, it could be a decent investment option for investors, and give them respectable yields by part owning a piece of real estate. Adding up the current rental income from the portfolio, and accounting for rent increases and rent revisions in line with the market, investors could expect to get about 8-8.5% interest. “Launched at 20% discount to NAV, it offers 8.25% yield, to be distributed in the form of dividend and interest in 50:50 ratio,” noted Motilal Oswal in a report.
Choice Broking notes that it will take time to displace investors from other instruments to this investment instrument. “But with best in-class infrastructure and presence in high growth market, the REIT 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 investor,” the research firm said.