REITs: The New Real(i)ty
Business Today|March 07, 2021
Though India caught on to the Real Estate Investment Trust model late, successful listings have not only demonstrated investor appetite, but also paved way for many others to consider a new approach to commercial real estate
Rukmini Rao

Leading the way in 1960, the US Congress signed a legislation introducing Real Estate Investment Trusts (REITs) to bring the benefits of commercial estate to the common American, which were largely available to financial institutions and wealthy individuals. REITs are securities linked to real estate that can be traded on stock exchanges once they get listed. They invest in income-generating real estate. This income gets distributed among unit holders, including sponsors, trustees, fund managers and unitholders. Bradley Real Estate Investors, Continental Mortgage Investors, First Mortgage Investors and First Union Real Estate were among the first ones to create REITs in the US. In 1965, Continental Mortgage Investors listed on the New York Stock Exchange.

Back home, though the Securities and Exchange Board of India (Sebi) introduced the draft REIT regulations as early as 2007, it was only seven years later in 2014 that Real Estate Investment Trusts Regulations, 2014 (REIT Regulations) were enacted. Other reforms, including liberalisation of foreign direct investment (FDI) norms in real estate, opening up of the domestic fund industry to foreign investments and clarity on tax implications of REITs, helped the market get ready for its first REIT listing in 2019. On April 1, Embassy Office Parks (a joint venture between US private equity firm Blackstone and Embassy group) REIT got listed on the BSE. Investors lapped it up.

According to estimates of the European Public Estate Association, the total value of listed real estate globally is around $3,864.3 billion and property under REITs forms nearly 53 per cent, around $2042.8 billion. However, this is largely concentrated in developed markets.

The two listed REITs of Embassy and Mindspace Business Parks hold a tad over 60 million square feet under listing out of the 500-plus million square feet of Grade A office space in India, according to industry estimates.

A healthy demand and supply dynamics for office space, factors such as low-interest rates, falling yields of government bonds globally, and interests from global firms have opened up opportunities for developers to tap into. The next two-three years could see another four-five listings, according to experts.

The India Story

Continue reading your story on the app

Continue reading your story in the magazine

MORE STORIES FROM BUSINESS TODAYView All

WE NEED TO REACH OUT TO MILLENNIALS GLOBALLY

Bata shoes are an integral part of almost every school-goer’s life in India. That is why most Indians believe that the brand — founded in what is now the Czech Republic in 1894 and headquartered in Lausanne, Switzerland — is local, despite operating in over 70 countries. The company, which does a ₹3,500 crore business in the country, recently appointed India CEO Sanjiv Kataria as its global head. Kataria, who had taken over as India head in 2017 and under whom Bata India’s profits rose 46 per cent, tells Ajita Shashidhar how India’s diverse footwear consumption habits have given him a unique understanding of customer needs across the globe. Edited excerpts:

6 mins read
Business Today
February 21, 2021

The Infra Catalyst

FM bets big on infrastructure with focus on asset monetisation and sharp rise in allocations to highways and railways

6 mins read
Business Today
February 21, 2021

Missing Credit

Bank credit growth shows signs of uptick, backed by retail and agri loans, but is expected to remain muted in FY21 due to asset quality pressures

5 mins read
Business Today
February 21, 2021

THE GREAT RESET

The FM has set the stage, but timely execution is critical

6 mins read
Business Today
February 21, 2021

If Executed Well, 8% Growth Is Possible

Economists, CEOs, consultants, sector specialists interpret Nirmala Sitharaman’s ‘Never-before’ Budget

10+ mins read
Business Today
February 21, 2021

Ease Of Compliance

Income-tax slabs unchanged, but small taxpayers will enjoy procedural relief in filing ITR and resolution of disputes; High-income earners may feel the pinch though

4 mins read
Business Today
February 21, 2021

Job Half Done

The Budget focuses on growth to create jobs but lacks holistic measures to solve the problem of massive unemployment

3 mins read
Business Today
February 21, 2021

Input troubles

A significant spike in prices of key raw materials post lockdown has thrown a curveball at the revival story of India Inc

7 mins read
Business Today
February 21, 2021

Booster Dose

With record healthcare expenditure and allocations focussing on mitigating the impact of Covid-19, it’s a shot in the arm for the sector

5 mins read
Business Today
February 21, 2021

Bold Privatisation Bet

In spite of criticism and Opposition jibes, the Centre commits itself to selling most PSUs; sets ambitious disinvestment target for FY22

5 mins read
Business Today
February 21, 2021
RELATED STORIES

A DIFFERENT KIND OF M CAR

PART SEDAN, PART CROSSOVER, PART M CAR, THE NEW 2 SERIES GRAN COUPE TRIES TO DO A LOT WITH A LITTLE

4 mins read
Motor Trend
May 2020

Colorado Blues And Bobs Mike Gnatkowski

A chance meeting set the stage. Returning from a trade show in June, I was taking the shuttle back to the extended parking lot at Denver International Airport. Eventually, the passengers dwindled down to a guy sporting a Browning cap and me.

8 mins read
The Upland Almanac
Winter 2019

THE IMPACT ON BUSINESSES AND WEALTH EROSION IS EXPECTED TO WEIGH ON THE INVESTMENT DECISIONS OF HNIS: JLL

Real estate, which plays the dual role of contributor as well as a beneficiary of growth, will prove to be the most important asset class in the HNI portfolio due to its tangible nature and associated wealth indication

8 mins read
Shopping Centre News
January 2021

My gang

The GT2 class is taking off, with four manufacturers now building cars and more coming. KTM launched its offering in October

10+ mins read
Racecar Engineering
January 2021

A MAN OF THE PEOPLE

Popular in all respects, courteous, and with expert knowledge of the law, Francis Reitz transformed the Orange Free State into what the British regarded as a ‘model republic’, says Graham Jooste.

5 mins read
Farmer's Weekly
August 21, 2020

BMW Z8

THE MOST BEAUTIFUL BMW EVER BUILT? YOUR MILEAGE MAY VARY, BUT WE’D BACK THE STUNNING Z8 TO CARRY THAT VOTE

8 mins read
Wheels Australia Magazine
July 2020

IPO Market Saw Fewer Deals But Higher Proceeds In 2019

Singapore was a small dot amidst a bleak global landscape for initial public offerings (IPO) in 2019, as total proceeds rose over fourfold to $3.13b from 2018’s $730m. The number of IPOs dipped to 11 from 15 in the previous year, according to PwC Singapore.

4 mins read
Singapore Business Review
January-March 2020

Where To Invest Your Money In 2020

It is that time of the year again when everyone looks forward to receiving their annual bonuses and working out what to splurge on and what to invest in.

10+ mins read
Singapore Business Review
January-March 2020