Real estate trusts may tap Rs 90k cr in first year
Real estate firms like DLF, Prestige, Phoenix Mills to benefit
Jun 14, 2014
Source : Business Standard


MUMBAI: Real estate investment trusts (Reits), which are expected to get a green signal in the upcoming Budget, could open up a new source of funding for developers battling declining sales and high cost of funds.

Reits, similar to mutual funds that can be listed and traded on exchanges, could attract investments of $10-15 billion (Rs 60,000-90,000 crore) in the first year of operations itself, said Maadhav Poddar, associate director, real estate practice, Ernst & Young.

Reits are tax-free instruments that invest in income-generating assets such as offices and malls and distribute the income as dividend to unit holders.


Reits are tax-free instruments that invest in income-generating assets such as offices and malls and distribute the income as dividend to unit holders

    Reits could attract investments of $10-15 billion (Rs 60,000-90,000 crore) in the first year of operations itself

    Many in the industry believe even government owned entities which have large portfolios of offices could look at selling them to Reits and leasing them back

They are expected to benefit companies like DLF, Prestige, Phoenix Mills and privately held firms such as Embassy and K Raheja Corp that have a large portfolio of leased assets.

 Poddar said companies like Infosys, Wipro and TCS could look at selling their office assets to Reits and taking them back on lease. “When Reits buy large assets from property developers, it helps developers to repay loans. Almost all developers have residential projects stuck over money,” said Poddar. “It will increase liquidity in the sector as a whole,” he added.

Many in the industry believe even government owned entities such as Air India, the Department of Telecom and public sector banks, which have large portfolios of offices, could look at selling them to Reits and leasing them back.

According to Morgan Stanley, India has 400 million sq ft of office and mall properties valued at $60 billion (Rs 3.72 lakh crore).

“Depending on the government policy, we will look at Reits,” said DLF Executive Director Rajiv Talwar. DLF has a rental income of Rs 2,000 crore a year from 20 million sq ft of assets leased out. On the company’s debt reduction plans, he said, “Reits will help if they come with the right laws.”

DLF’s debt stood at Rs 18,500 crore at the end of the fourth quarter of 2013-14 and the company said plans to reduce its debt by half could be delayed by up to two years.

However, regulators, developers and investors are waiting on the government’s view on the tax treatment of Reits.

“It is very important that Reits get the tax treatment of a pass-through vehicle. We have the Reit framework in place, but without tax breaks, the instrument will not take off,” UK Sinha, chairman of the Securities and Exchange Board of India, said on Wednesday.

Atul Ruia, managing director of Phoenix Mills, a Mumbai based developer, echoed Sinha’s views. “A Reit is not a company, it is a trust. While the special purpose vehicle pays full tax, the Reit should enjoy the pass-through status,” Ruia said.

Poddar said the government should also allow foreign direct and portfolio investment in Reits and exempt payment of stamp duty when buying and selling properties.



Latest Realty News

Delhi: 40% buildings don’t comply with fire safety norms
Jun 14, 2014
DELHI: Four out of 10 buildings in Delhi do not comply with the safety norms, according to fire officers. The unsafe buildings include residential and commercial complexes, schools and nursing homes. Even the playschool which caught fire on June 10 did not have a no-objection certificate (NOC), the officers said.
Noida homebuyers left in the lurch again!
Jun 14, 2014
DELHI: The recent judgment of the National Green Tribunal (NGT) prohibiting the Noida authority from giving completion certificates to projects within 10km radius of the Okhla Bird Sanctuary will affect around 20,000 buyers whose apartments have been completed and ready for delivery.
SC dismisses Noida builder’s plea against NGT order
Jun 14, 2014
DELHI: The Supreme Court on June 10 refused to entertain a plea of real estate firm Jaypee Infratech seeking a direction to Noida Authority to grant completion certificate to its projects which fall within 10km radius of a bird sanctuary.
Real estate shares on a roll; Realty index surges 6%
Jun 14, 2014
MUMBAI: Shares of real estate companies are on a roll with most of the frontline stocks trading higher by up to 17% on the bourses after President Pranab Mukherjee in his joint address to the Parliament today said that the government proposes proper housing to all citizens by 2022.
Real opportunities in real estate?
Jun 14, 2014
MUMBAI: Since May 16, the Bombay Stock Exchange's realty index has risen 32.50 per cent. The surge in real estate stocks suggest that the property market is booming again. But analysts believe that the fortunes of the sector will not change so soon. Does it mean then that before the price rise starts, buyers should jump to buy property?
Adopting Mamata’s colour code will get homeowners tax sop
Jun 14, 2014
KOLKATA: Want a property tax waiver for 2014-15? Paint your house or apartment building white-and-blue. Yes, you've read it right. The proposal, which has mayor Sovan Chatterjee's blessings, was accepted in the mayor-in-council meeting on Monday.
Pay your property tax in advance, get concession
Jun 14, 2014
THANE: The Thane Municipal Corporation (TMC) has restarted its earlier scheme of giving concessions to residents who pay property taxes in advance. Under the scheme, residents who paid the entire year's property tax in May were given a concession of 5%. Similarly, the TMC will give 4% concession to those who pay the entire year's tax by June, 3% by July and 2% in August.
1,370 km national highways to be upgraded at Rs 13,000 cr
Jun 14, 2014
BERHAMPUR: Around 1,370 km of national highways (NHs) in Odisha will be developed into four and six lanes under Phase III, IV and V under the National Highway Development Project (NHDP). The cost of upgradation of the national highways is estimated at around Rs 13,000 crore, sources said.
EOW Submits Papers for Seizure of Golden Land Developer’s Assets
Jun 14, 2014
BHUBANESWAR: The Economic Offences Wing (EOW) of the State Government on Wednesday submitted a proposal before the Finance Department seeking confiscation of the assets of Golden Land Developers Ltd which is charged in the chit fund scam.
Affordable Housing Units by BDA in Capital City Soon
Jun 14, 2014
BHUBANESWAR: In a bid to stabilise the housing prices in the Capital, the Bhubaneswar Development Authority (BDA) has decided to construct 7,000 affordable housing units by the end of this year.

Latest Realty News Of State

Realty Talk's