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Reits deliver 2.58-8.11% annualised returns since listing, says report


NEW DELHI: Of the three Reits (Real Estate Investment Trust) registered with the Securities Exchange Board of India (Sebi), Mindspace Business Parks has delivered the highest absolute returns of 8.11% year-to-date till 31 October, according to a report by India Windmill Capital, a wholly-owned subsidiary of smallcase.

The other two, Brookfield India Real Estate Trust and Embassy Office Parks, have delivered absolute returns of 7.30% and 1.40%, respectively, during the same period.

The report also provided data on the performance of the three Reits since their listing. Embassy Office Parks was the first to be listed in April 2019 and has delivered 2.58% since then. Mindspace Business Parks and Brookfield India Real Estate Trust were listed in August 2020 and February 2021, respectively, and have delivered 8.11% and 7.30%. Returns greater than one year are annualised, as per Windmill Capital.

Between 30 September 2021 and 30 September 2022, India recorded 6.85% year-on-year (YoY) growth in total leasable area of listed Reits from 87.6 mn sq ft to 93.6 mn sq ft, the report showed.

“According to corporate filings of listed Reits , Bengaluru continues to dominate the Reits market with 27.8 mn sq ft of total leased area under Reits as of 30 September 2022. Noida witnessed an exponential growth in total leasable area under Reits from 7.4 mn sq ft as of 30th September 2021 to 11.9 mn sq ft as of 30th September 2022, registering 60.81% YoY growth,” Windmill Capital said in its statement.

As per expansion plans of the listed Reits, current leasable area is expected to grow by over 10% in the coming quarters.

“India’s Reits market is poised for accelerated growth as both investors and sponsors are drawing confidence from evolving regulatory framework, transparency, institutionalised ownership and ability to deliver robust returns. Regulations have also encouraged retail investors with the reduction in minimum subscription (from 50,000 to 15,000). This increases the liquidity for the entire Reits market and allows greater participation from young retail investors,” said Vasanth Kamath, founder and CEO, smallcase.

Citing findings from an upcoming report titled ‘Rise of the Indian Retail Investor’ by Zinnov Management Consulting and smallcase, Windmill said Reits are growing in popularity as retail investors allocate up to 2% of their investment portfolio in Reits as compared to five years back.

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