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It was expected that Blackstone-backed Embassy Office Parks would file the draft documents shortly to develop the first real estate investment trust (REIT) of the country. However, real estate experts reveal that it will not be possible before the current year ends. According to the sources in the industry, Embassy Group, a real estate firm is bracing up to come up with an INR 5,250-crore REIT. This will perhaps be the largest office REIT listing in Asia. However, they have warned that it might take time to have all the approvals, before things proceed further. The Embassy Group is based in Bengaluru and presently has more than 30,000 Sq. Ft. of leased space for office. Besides, it has got a pipeline of around 22 million Sq. Ft. across the key cities in the country.
According to the experts, it will take some time for the REIT listings to be done. Besides, the regulatory approvals may take further time, as these depend on the conditions in the market. It is expected that the launch will not take place this year, however, it will definitely be before 2019.
According to the sources, it is unlikely that the REIT listing will lead to a rush for more listings. The next listing will be dependent on the price of the first one. It is necessary to obtain an approval from the government for the first listing. Some issues have to be initially sorted out, and the source said that it is hopeful that the REIT will get listed by the end of this year.
You should be knowing, that REITs, as listed entities, invest in properties that generate income. They distribute at least 90% of the income to the unit-holders in the form of dividends. After the registration with SEBI, it is mandatory to get the units of REITs listed on exchanges and securities like trades.
Mainly commercial assets are listed through an REIT, which include primary office spaces, that can generate a lucrative and steady rental income. These include hotels, malls, hospitals, student housing, schools, hotels, PSU buildings and other assets.
Through REITs, investors with small capitals can invest in real estate. Investors with around 2 lakhs can go for these investments. This is similar to listed shares, where small investors can purchase these units of REITs from both the secondary and primary markets.
In 2014, SEBI had come up with certain regulations over REITs and infrastructure investment trusts (InvITs). This allowed these trusts to be set up and get listed. In certain advanced markets, these have become quite popular. However, so far, only two InvITs have got listed, the Indiagrid Trust and IRB InvIT Fund. Once the REITs are listed, the investors will gain a greater level of confidence. This is likely to give a boost to the real estate industry.
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