The 47.50 billion rupee ($690 million) initial public offering by the Embassy Office Parks REIT India’s first real estate investment trust was approximately 2.6 times oversubscribed on the last day of the offer on March 20, 2019. As of April 18, 2019, the REIT’s unit price has since risen over 10% from its debut price of Rs 300 on the National Stock Exchange and the Bombay Stock Exchange.
A joint venture between India’s Embassy Group and Blackstone Group, the REIT owns offices and business parks that house multinational tenants such as JP Morgan, IBM, Wells Fargo, and Google.
REIT AsiaPac spoke to Mike Holland, CEO of the Manager to the Embassy Office Parks REIT, and asked him about the REIT’s leverage strategy, dividend payouts and potential growth.
Could you tell us a bit more about your portfolio? What’s unique about it? What’s the concept around it in terms of the location, the quality, and the tenant mix?
It is unique in that it is India’s first real estate investment trust. The portfolio as of March 27, 2019 is at 33 million square feet, making it Asia’s largest office REIT. That 33-million-square-feet portfolio is spread across four cities, Bangalore, Mumbai, Pune, and NCR or the National Capital Region. Those four cities account for 72.5% of total Grade A office stock in the country. To give you some context in terms of the scale of the market: over the last five years, those four markets absorbed about 136 million square feet, which is more new absorption than the combined office space of the 11 global cities across the world.
More than 200,000 people work in our business parks. They are employed by over 160 office tenants and we have over 95% committed occupancy as of December 31, 2018. Within the 33 million square feet, there are 25 million square feet of offices, which is up and running and completed, with the balance 8 million square feet of potential on-campus development. This reflects around 11% of the value of the portfolio so, in accordance with the Indian REIT regulations requiring at least 80% of the portfolio to be completed and income producing, new build development represents a small component of the overall portfolio.
Read the full interview at REIT AsiaPac