In the wake of the budget proposal last week, several real estate companies and private equity funds are planning to list their commercial property portfolio through the real estate investment trusts (REITs) in the near future. These include Embassy group, DLF, RMZ Corp, Xander, Red Fort Capital among others, all of which have accumulated income generating commercial assets.
“There are over 10 companies that are in different stages of preparing a portfolio that can be ‘reited’,” said Anckur Srivasttava, chairman of GenReal Property Advisers.Finance minister Arun Jaitley had proposed incentives for real estate investment trusts or REITS, which are listed entities that primarily invest in leased office and retail assets, allowing developers to raise funds by selling completed buildings to investors and listing them as a trust.
REITs seek to reduce the pressure on the banking system and make available a new avenue of equity to cash-strapped developers. The budget seeks to provide a pass-though status to REITS for the purpose of taxation, which means a REITS holder will pay tax on the income, not the fund.
“We will certainly look forward to launching REITS in the near future,” said a DLF spokesperson. The company has 28 million square feet of leased assets.
“For future commercial properties, we will look at REIT when the need arises,” said Brotin Banerjee, MD and CEO, Tata Housing.
The Blackstone Group and its local partner Embassy Group are also planning to list REITs on the domestic exchange. “We will certainly list our properties through REITs after the fine details on the taxation and regulatory aspects are ironed out,” said Mike Holland, chief executive officer, Embassy Office Parks.