After AIM, realty cos turn to Dubai to raise funds
India’s leading real estate developers are now ‘aim’ing for new shores. After raising funds from UK’s AIM, they are now flocking to the DIFX and the Singapore Stock Exchange to float Real Estate Investment Trusts (Reits) as an alternate strategy t...
By Rajesh Unnikrishnan, TNN |
MUMBAI: India’s leading real estate developers are now ‘aim’ing for new shores. After raising funds from UK’s Alternate Investment Market (AIM), they are now flocking to the Dubai International Financial Exchange (DIFX) and the Singapore Stock Exchange to float Real Estate Investment Trusts (Reits) as an alternate strategy to raise funds.
Unitech, DLF, Hiranandani Developers, Housing Development and Infrastructure, DS Kulkarni Developers, Orbit Corporation, Embassy group and Nitesh Estates are among real estate majors exploring options for listing their respective Reits at DIFX or the Singapore bourse. “DIFX and Singapore market have emerged as the two new venues for Indian developers to raise funds. Both these markets have favourable regulations to float Reits. We are advising many firms to tap them,” said Jai Mavani, executive director, KPMG India.
Reits have suddenly caught the fancy of Indian developers because their traditional funding sources are restricted to the primary market and private equity. A Reit helps developers securitise their rental yields - lease income - from their commercial properties by issuing shares to financial institutions or retail investors. Currently, many Indian developers are working to bring their income generating commercial properties under a special purpose vehicle (SPV) or a subsidiary company, which will then be listed in the overseas market in the form of a Reit.
Reits, a popular fund-raising avenue in several developed countries, use funds raised from investors to purchase and manage properties. They are traded on major exchanges just like stocks. They are also granted special tax concessions and enable sharing of non-residential properties, such as hotels, malls, and other commercial or industrial properties that yield rental income.
Last week, Ascendas India Trust, the first India-focused Reit, raised S$ 500 million from the Singapore market pricing its units at S$1.18 each. The trust is owned and sponsored by industrial land owner Ascendas, a unit of the Singapore government-owned industrial land owner JTC.
A senior official from Unitech, India’s second-largest real estate firm by market cap, said the company would be among the first lot of Indian developers to float a Reit in the overseas market to raise about Rs 10,000 crore to meet expansion plans. Unitech plans to sell a stake in its six SPVs that currently own six commercial properties after listing in the form of Reits in Singapore or DIFX, said the official.
Rajiv Singh, vice-chairman of DLF, India’s largest property developer by market capitalisation, said the group is in the process of floating a Reit. “We are looking at all possibilities. It may take some more time,” Singh told ET. Investment bankers said DLF is raising $1 billion from Lehman Brothers Holdings and other investors for a fund that will be converted into one or several Reits, which will be listed on the DIFX or Singapore Stock Exchange.
Mumbai-based Orbit Corporation and Bangalore-based Nitesh Estates are also working on the Reit concept. Ramashraya Yadav, head-finance and strategy, Orbit Corporation, said, “We are working on various strategies to raise funds from overseas markets. Floating Reit is one strategy that we are working at,” he said.
Pune-based DS Kukarni Developers (DSKD) is trying to rope in an overseas Reit initially to invest in its 250-acre SEZ currently under development and other commercial projects. Subsequently, the SPV will be listed on an overseas bourse. “We are in talks with various Reits and a deal will be concluded soon,” Sumit Arora, vice-president-strategy and business development, DSKD, said.
Alternate Investment Market (AIM), the submarket of LSE, has emerged as a favourite destination for Indian real estate firms to raise funds for expansion. However, Reits are different from the AIM market, which allows firms to raise funds even for the developing projects. Reits, however, entertain only income-generating real estate properties.
Currently, shares of many AIM-listed Indian real estate funds or firms are trading below their listed prices. “All these AIM-listed funds are investing in developing properties. These properties may take some more time to generate income. It is quite natural that the share prices are trading below the listed prices,” investment bankers said.
Many Indian real estate firms like Mumbai-based Mantri group have lined up plans to list on the AIM. “We have plans to raise Rs 1,000 crore from the capital market. We are considering AIM listing as a part of our fund raising programme,” Sunil Mantri, chairman, Mantri group, said. The group is raising the fund for its real estate expansion plans and its proposed foray into the power business.
Unitech, DLF, Hiranandani Developers, Housing Development and Infrastructure, DS Kulkarni Developers, Orbit Corporation, Embassy group and Nitesh Estates are among real estate majors exploring options for listing their respective Reits at DIFX or the Singapore bourse. “DIFX and Singapore market have emerged as the two new venues for Indian developers to raise funds. Both these markets have favourable regulations to float Reits. We are advising many firms to tap them,” said Jai Mavani, executive director, KPMG India.
Reits have suddenly caught the fancy of Indian developers because their traditional funding sources are restricted to the primary market and private equity. A Reit helps developers securitise their rental yields - lease income - from their commercial properties by issuing shares to financial institutions or retail investors. Currently, many Indian developers are working to bring their income generating commercial properties under a special purpose vehicle (SPV) or a subsidiary company, which will then be listed in the overseas market in the form of a Reit.
Reits, a popular fund-raising avenue in several developed countries, use funds raised from investors to purchase and manage properties. They are traded on major exchanges just like stocks. They are also granted special tax concessions and enable sharing of non-residential properties, such as hotels, malls, and other commercial or industrial properties that yield rental income.
Last week, Ascendas India Trust, the first India-focused Reit, raised S$ 500 million from the Singapore market pricing its units at S$1.18 each. The trust is owned and sponsored by industrial land owner Ascendas, a unit of the Singapore government-owned industrial land owner JTC.
A senior official from Unitech, India’s second-largest real estate firm by market cap, said the company would be among the first lot of Indian developers to float a Reit in the overseas market to raise about Rs 10,000 crore to meet expansion plans. Unitech plans to sell a stake in its six SPVs that currently own six commercial properties after listing in the form of Reits in Singapore or DIFX, said the official.
Rajiv Singh, vice-chairman of DLF, India’s largest property developer by market capitalisation, said the group is in the process of floating a Reit. “We are looking at all possibilities. It may take some more time,” Singh told ET. Investment bankers said DLF is raising $1 billion from Lehman Brothers Holdings and other investors for a fund that will be converted into one or several Reits, which will be listed on the DIFX or Singapore Stock Exchange.
Mumbai-based Orbit Corporation and Bangalore-based Nitesh Estates are also working on the Reit concept. Ramashraya Yadav, head-finance and strategy, Orbit Corporation, said, “We are working on various strategies to raise funds from overseas markets. Floating Reit is one strategy that we are working at,” he said.
Pune-based DS Kukarni Developers (DSKD) is trying to rope in an overseas Reit initially to invest in its 250-acre SEZ currently under development and other commercial projects. Subsequently, the SPV will be listed on an overseas bourse. “We are in talks with various Reits and a deal will be concluded soon,” Sumit Arora, vice-president-strategy and business development, DSKD, said.
Alternate Investment Market (AIM), the submarket of LSE, has emerged as a favourite destination for Indian real estate firms to raise funds for expansion. However, Reits are different from the AIM market, which allows firms to raise funds even for the developing projects. Reits, however, entertain only income-generating real estate properties.
Currently, shares of many AIM-listed Indian real estate funds or firms are trading below their listed prices. “All these AIM-listed funds are investing in developing properties. These properties may take some more time to generate income. It is quite natural that the share prices are trading below the listed prices,” investment bankers said.
Many Indian real estate firms like Mumbai-based Mantri group have lined up plans to list on the AIM. “We have plans to raise Rs 1,000 crore from the capital market. We are considering AIM listing as a part of our fund raising programme,” Sunil Mantri, chairman, Mantri group, said. The group is raising the fund for its real estate expansion plans and its proposed foray into the power business.
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