REALTY: HOW AN SM REIT IS OPENING MORE DOORS

With its first public offer, Property Share is giving retail investors a piece of the action in the real estate sector

- Madhurima Nandy

Sandeep Gupta is always looking for opportunities to expand his investment portfolio. And real estate is a big part of that portfolio. So, when the public offer for ‘PropShare Platina’, a new investment scheme from Property Share, opened on 2 December, the Bengaluru-based entrepreneur wanted in. “My primary motivation was to try a new financial product. I also believe real estate is one of the most lucrative investment classes in India,” Gupta, a CFA and the managing director of Lucretius Capital Advisors, told Mint.

Property Share is the investment manager for Property Share Investment Trust, India’s first registered small and medium real estate investment trust (SM REIT). The public offer aimed to raise ₹353 crore to acquire six floors of a building in ‘Prestige Tech Platina’, an office park in Bengaluru, from US-headquartered tech firm 24(7).ai, and then lease it back to the company for a rental yield of 9%.

SM REITs are similar to REITs, and likewise, are governed by the Securities and Exchange Board of India (SEBI). But rather than invest in a basket of properties like regular REITs, they generally bet on specific and completed income-yielding properties, as PropShare Platina did, and launch individual schemes—much like individual mutual fund schemes—to raise capital. And unlike REITs, where the value of the properties proposed has to be at least ₹500 crore, the threshold for an SM REIT scheme is ₹50 crore, with the ceiling at ₹500 crore.

Industry experts believe that SM REITs can reshape India’s commercial real estate landscape by investing in ready properties, and organizing an office market that is fragmented. According to a recent report by workplace solutions firm Vestian, more than half of India’s Grade-A office space is REIT-worthy. And as per property advisory CBRE India’s estimates, the country’s potential SM REIT market value is likely to exceed $60 billion by 2026.