Embassy REIT IPO subscribed 2.6 times on last day; what it means for Indian real estate

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Updated: Mar 20, 2019 6:21 PM

After India’s first REIT issue Embassy Office Parks IPO saw a robust demand on the final day of its public offer, industry experts point out that such demand points to the growing confidence in the Indian realty market.

sensex, niftyTotal bids received for the offer stood at 18,11,46,40 against total issue size of 7,12,56,400 units.

After India’s first REIT issue Embassy Office Parks IPO saw a robust demand on the final day of its public offer, industry experts point out that such demand points to the growing confidence in the Indian realty market. The Rs 4,750 crore issue, which opened for subscription on Monday, was subscribed nearly 2.57 times on the last day, NSE data showed at 5.30 pm. Total bids received for the offer stood at 18,11,46,40 against total issue size of 7,12,56,400 units.

“It’s definitely encouraging to see that the 3rd Day of REIT IPO had done so well that it was oversubscribed. REIT IPO has definitely done wonders for Nifty Realty Index, since the market was trading at its highest peak since September 18th, 2018 reiterating the improved transparency in confidence in Indian realty market,” Parth Mehta, Managing Director, Paradigm Realty said, adding that this will attract Institutional investors along with other investors across the market to other realty companies in India.

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Blackstone and Bengaluru-based Embassy Office Park’s IPO wherein it looked to raise Rs 4,750 crore had the unique distinction of being Asia’s biggest REIT issue. The issue opened for subscription on 18th Mar’19 and ended this evening. The firm had set a price band of Rs 299-300.

The listing of India’s first REITs was one of the most awaited events for the real estate sector as it has taken over a decade and half to come to fruition, said Shishir Baijal, Chairman & Managing Director, Knight Frank India. “The over subscription of REITs is therefore a very encouraging sign for the real estate sector at large and specially for the commercial segment.

This is not just India’s first REITs offering, but also the largest in Asia. This positive response to the REIT will help build further confidence amongst global investors and attract them to consider India along with its global peers such as Singapore and Hong Kong,” he noted.

Sharing his assessment of the commercial office space in the country, Shishir Baijal noted that absorption in India has been performing exceedingly well reaching a historic high of 47 million square feet in 2018.

According to  Arvind Nandan, Executive Director-Research, Knight Frank India  a good IPO would open the doors for several more REITs in near future. “Indian commercial real estate is populated with several such high quality assets, which can be rolled into REITs very soon. For the developers, this would be a good avenue for raising finance to repay debts or to raise capital for O&M of assets held by the REIT,” he said, adding that since REITs need to ensure that 90% of net distributable cash is distributed as dividends, all eyes will be on the performance aspect in the initial days.

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