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The Embassy Real Estate Investment Trust IPO – The Trendsetter


Embassy Tech Village

The Embassy REIT IPO is not the first real estate IPO to hit the Indian Market but it may be the trend setter in many aspects. First the asset portfolio is of high quality which means their Office Parks and other Commercial space is located in high growth markets of Bangalore, Mumbai,Pune and Noida. Secondly they have attracted the blue chip companies with deep pockets as their tenants. The average duration of their tenants is 6.9 Years which gives them a lot of stability in their revenue streams. With the average projected yield of 8.25 percent , its anyday a better investment than fixed deposits. However considering the long term horizon the real wealth will be created when the trust will liquidate the appreciated assets which is a missing feature of Fixed deposits.

So investment in this IPO will be akin to investing in real estate market as the dynamics of financial returns will be quite similar. What happens with investing in real estate market is that you have to invest a sizeable chunk of money to own a house or commercial space which is not possible for small investors. This IPO circumvents that block and opens a window for small time investors to have real estate investments in their asset portfolio. Even before the IPO went public the strategic investors picked up 55% stake in the IPO size which goes on to show the lucrative ROI one can expect from it. The small investors if they want to reap the benefits of capital appreciation, they ought to have holding capacity and a long term horizon with this investment. But a word of caution for investors, not all real estate  investment trust IPOs are fancy as we have seen in the previous two IPOs of similar nature which are quoting below par these days. As any real estate investment is associated with risk so are the REIT IPOs. However in case of Embassy IPO the fund managers have very craftily preemptied a lot of risks and built  a strong asset class which will only go up barring   a few sovereign risks which are there for any investments. This concept of real estate investment trust is new to the Indian market and the general perception around it is that the momentum in this direction will only pick up and will foster a win win situation for investors and country alike.

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REII

Real Estate Institute Of India is Real Estate Focused Industry Think Tank With The Sole Purpose Of Providing Value Inputs For Industry Benefit. Key Areas Will Be Education & Consulting . In spite Of Being Largest Provider Of Jobs In India Real Estate Was Largely Unregulated. Now With RERA Implementation Industry Is Looking At Regulated Market And Will Need More Trained Man Power. REII Is Poised To Take Leadership Position In This Domain. It Will Conduct Surveys,Research And Seminars For The Benefit Of Stake Holders.

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