Realty firms to opt for trusts in Singapore or IPOs in India if Reits don't take off
Reits are considered ideal exit options for developers with a large rental portfolio in office assets or malls
Mar 11, 2015
Source : Business Standard


Mumbai: If real estate investment trusts (Reits) do not become a viable option in the country in a year or two, say investment bankers and tax experts, property developers are likely to explore an initial public offer (IPO) here or floating of business trusts in Singapore.

Reits are considered ideal exit options for developers with a large rental portfolio in office assets or malls. The Blackstone and Embassy joint venture, the Raheja group and Phoenix Mills are among those seriously considering this route to unlock the value in their assets.

In his Budget proposals for 2015-16, the Union finance minister exempted capital gains for the sponsors at the time of listing of units of Reits. And, gave a pass-through of rental income to unit holders on assets held by Reits. However, developers and tax experts said lack of clarity on (MAT) and (DDT) could be a big hindrance in launching Reits here.

Many in the sector say Reits are some time away and people would explore alternative means of raising capital.

“Stakeholders would explore other alternatives such as an listing or the business trusts in Singapore and compare these with the Reits option, before taking a final call on what works. Presently, while parity has been provided to a large extent with an IPO exit, the key asked for and not accepted include a removal of MAT and relief from DDT in a case where the assets are held through special purpose vehicles,” said Gautam Mehra, partner at PricewaterhouseCoopers, at the Asia Pacific Real Estate Association event here on Monday.

In the past, developers such as Indiabulls and Ascendas have floated realty trusts and listed it on the Singapore Stock Exchange (SGX). Others such as DLF and Phoenix have considered the option.

“If Reits do not happen in one year, developers/investors will look at Singapore. For debt, they can always look at private equity, commercial mortgage-backed securities and lease rental discounting,” said an executive at Morgan Stanley, who did not want to be named.

Said Rajeev Talwar, executive director at DLF: “Hong Kong and Singapore do not have DDT or MAT, which would lead to higher returns and higher valuations for investors. If India says it would not do away with DDT and MAT, why would investors come here?”

Latest Realty News

Mar 11, 2015
Mumbai: The Union Budget 2015 may have disappointed most stakeholders in the real estate sector as the finance minister did not announce any measure to benefit either demand or supply in the sector
Mar 11, 2015
Pune: Major real-estate players in Pune are resorting to home festival bonanza with discounts and gifts for buyers
Mar 11, 2015
MYSURU: The heritage city will strive to free itself from slums so its brand value is enhanced
Mar 11, 2015
JAIPUR: Purchasing a property for more than Rs 50 lakh will cost people a pretty penny in the state since chief minister Vasundhara Raje has withdrawn the cap on registration fee
Mar 11, 2015
NEW DELHI: Big relief to 25,000 applicants who have been waiting for last 34 years to get possession of plots in Rohini in north Delhi
Mar 11, 2015
VIJAYAWADA: Realty business that rode on speculation over the location of AP's capital claimed its first victim in the city
Mar 11, 2015
COIMBATORE: Building and land approvals might get simpler now thanks to a public interest litigation filed
Mar 11, 2015
Mr Amit Bhagat CEO & MD, ASK Property Investment Advisors says, that the current realty market is not conducive for Investors to invest, while it is favourable for end-users
Mar 11, 2015
BHUBANESWAR: Real estate developers may soon have to create a corpus for future maintenance of the affordable housing projects
Mar 11, 2015
New Delhi: The amended land acquisition bill that makes it easier to acquire land for select projects

Latest Realty News Of State

Realty Talk's