7/8/2021 REITs, InvITs get more attractive; should you invest now?

u invest now? A performance check of listed REITs, InvITs - The Financial Express

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REITs, InvITs get more attractive; should you invest now? A performance check
of listed REITs, InvITs
By: Kshitij Bhargava
Updated: February 09, 2021 3:49 PM

The Union Budget provoked more investor interest in real estate and infrastructure funding by
opening up more investment avenues for REIT and InvIT firms.

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7/8/2021 REITs, InvITs get more attractive; should you invest now? A performance check of listed REITs, InvITs - The Financial Express

The notification doesn't mention any country and covers all countries sharing land-border with India, but China is
furious as this adversely affects its commercial relations with India.

The Union Budget provoked more investor interest in real estate and infrastructure funding by
opening up more investment avenues for REIT and InvIT firms. Brookfield REIT IPO, which
opened for subscription later that week, got subscribed nearly eight times the issue size. More
REITs and InvITs could soon make stock market debuts. Analysts say the outlook for REIT and
InvIT investments is bright. However, a look at the share price performance of the four listed
REITs and InvITs gives a mixed picture, with mostly subdued returns. IRB InvIT Fund shares are
at half the issue price, but IndiGrid returns have shot up. Here’s a share price performance
recap of all the listed REITs and InvITs so far.

Performance recap

Embassy Office Parks REIT made Dalal Street debut in April 2019 at
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Retirement Planning: a listing price of Rs 300, vs the IPO issue price of Rs 300. Now, a little
Steps to build a stable less than two years after listing, it’s trading at Rs 350, a gain of 16%
retirement income
over the issue/listing price. Embassy REIT share price surged to an all-
DLF targets 30 pc time high of Rs 518 in March of 2020, a 72% gain over the listing price.
growth in sales
bookings to Rs 4,000 cr But then, it got battered during the March 2020 sell-off, and fell 32%.
during FY22; to launch
Embassy REIT shares have traded mostly sideways since then.
8 mn sq ft area

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7/8/2021 REITs, InvITs get more attractive; should you invest now? A performance check of listed REITs, InvITs - The Financial Express

Real Estate: Noida Mindspace Business

leads in office space
uptake in Delhi-NCR, Parks REIT is the
pips Gurgaon
youngest of the two
REITs listed on the
bourses. Mindspace
began trading in August
2020, dodging the global
sell-off in March. The
REIT listed on the
bourses at Rs 304 vs the
IPO price of Rs 275 per share. Now nearly six months later, Mindspace REIT is trading at Rs
329, up 19.6% from its issue price. It reached an all-time high of Rs 348 last month. 

IRB InvIT Fund had an issue price of Rs 100-102 per unit during its public issue back in 2017.
After having listed flat in May 2017, IRB InvIT was in a constant downfall till March last year,
falling 75% since listing to reach a price of 25. Since then the InvIT has surged 92% to now
trade at Rs 48, however, that is still half the issue price. The highest IRB InvIT Fund has scaled
in the last 52-weeks is Rs 53.28 in February last year.

IndiGrid Trust InvIT, on the other hand, has continued to go higher. After listing at Rs 100
apiece, flat from the issue price of Rs 100, IndiGrid InvIT remained flat till March of 2020, never
crossing the Rs 100 mark. During the pandemic aided sell-off, IndiGrid fell merely 10% to hit a
low of Rs 85.7 per share. Since then the InvIT has surged a massive 64% to hit a price of Rs
140 per unit earlier this month.

Dividend yields

The attraction of REIT and InvIT investments also is in dividend payouts, in addition to the share
price gains (or losses). Embassy REIT has distributed on an average Rs 5.95/unit every quarter,
according to  Deepak Jasani, Head of Retail Research, HDFC Securities. “IPO allottees of
Embassy REIT have seen total returns (XIRR) of 15.8% since inception,” he added. Investors
entering now could expect pre-tax annual distribution yields of ~6.7%, assuming similar
distributable cash flows going forward. Mindspace REIT, being a rather new REIT has not just
distributed a dividend to date.

On the other hand, among the infrastructure investment trusts, at current levels, pre-tax annual
distribution yield is quite attractive at ~21% for IRB InvIT Fund. For IndiGrid Trust, the
distribution yield remains at 8.1%, which is better than yields of AAA-rated paper, Jasani added.

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7/8/2021 REITs, InvITs get more attractive; should you invest now? A performance check of listed REITs, InvITs - The Financial Express

Outlook

Embassy Office Parks might have fallen sharply from its peak, but its portfolio assets, its
collection efficiency and the management commentary continues to remain positive. Deepak
Jasani said. “Green shoots of the demand recovery are now visible with both multinational and
Indian corporates showing interest in select new Grade A space across various office markets,”
he added.

For IRB InvIT, the worst for the toll operating business seems to be over and the bottom seen in
these times is less likely to be tested again, according to Jasani. “However one has to be aware
that road assets are inherently riskier than transmission assets as the assumptions of traffic
growth and toll growth have seldom been met in the past due to economic slowdown,
competition from other modes of transport and also competing roads/expressways being built,”
he added.

Further, Deepak Jasani said that investing in these instruments comes with risks that may stem
from regulations in respective fields and economic growth. “From a trading price gain
perspective, investors should take a note these instruments are likely to behave like very low
beta stocks. Investors should be prepared to withstand some volatility in these instruments,” he
added.

(The stock recommendations in this story are by the respective research and brokerage firms.
Financial Express Online does not bear any responsibility for their investment advice. Please
consult your investment advisor before investing.)

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