Tata Realty REIT: Tata Realty may look at launching REIT after 2-3 yrs; expanding commercial properties portfolio

New Delhi: Tata Realty and Infrastructure Ltd will grow its commercial real estate portfolio to at least 12 million square feet over the next 2-3 years before considering launching a public offering from the Real Estate Investment Trust (REIT) to monetize its rental office properties . In an interview with PTI, Sanjay Dutt, the company’s managing director (MD) and chief executive officer (CEO) said the company has 7 million square feet of commercial rental portfolio, almost all of which are office properties, and are making huge investments in expansion.

On Saturday, Tata Realty announced an investment of Rs 5,000 crore over the next 7-8 years to develop a 7 million square foot IT park project in Navi Mumbai in partnership with UK investment firm Actis.

When asked whether the company would at some point consider a public issue of floating REITs, Dutt said, “We will. We already have 7 million square feet. So technically we (REIT) can do it today. ”

“But we think that in the next 2-3 years we will expand our portfolio, study the market, discuss it with our partners and then think about REIT,” he said.

Over the next 2-3 years, Dutt said, the company plans to expand its portfolio to “at least 12 million square feet” before considering REIT.

The occupancy rate in the operational business buildings is currently around 95 percent.

There are currently three REITs listed on Indian stock exchanges – Embassy Office Parks REIT, Mindspace Business Parks REIT and Brookfield India Real Estate Trust.

In addition to IT parks and data centers, Tata Realty will also invest in the development of shopping mall projects in major cities such as Delhi-NCR, Mumbai and Bengaluru.

“We will continue to invest in retail,” said Dutt.

The company had sold two shopping centers in Amritsar and Nagpur for 700 billion rupees to Singapore-based Virtuous Retail South Asia at the end of 2019.

Dutt said the company sold these retail properties to focus on major cities.

Of the total of 7 million square meters, the company currently has a 300,000 square meter multi-level parking garage in Gurugram, Haryana.

As part of its expansion plan, Tata Realty laid the foundation stone on Saturday for its new Intellio Park IT park project, which extends over 47.1 hectares in Ghansoli, Navi Mumbai.

“We are developing 7 million square feet of development space on this lot, mostly IT space and data centers with some ancillary retail and non-IT office space,” said Dutt.

“The total investment for this project is 5,000 billion rupees. This is Tata Realty’s largest single investment in office real estate, ”he said.

In the first phase, the company is developing a 5 lakh square foot (0.5 million square foot) building.

“We’re already in the market to pre-let 5 lakh square feet or even more. We can offer tailor-made solutions for companies. We are discussing the development of data centers, ”he said.

The Navi Mumbai area charges a monthly rent of 60-70 rupees per square foot. Annually, 2-3 million square feet of office space is leased in Navi Mumbai.

Tata Realty and Infrastructure Ltd, a wholly owned subsidiary of Tata Sons, has an extensive portfolio of over 50 projects in 15 cities.

The company has developed over 15 million square feet of commercial projects and approximately 12 million square feet of projects in development and planning.

REIT, a globally popular tool, was launched in India a few years ago to attract investment in the real estate sector through the monetization of profitable assets.

It helps unlock the tremendous value of real estate assets and enables retail involvement.

The first REIT, with an issue size of Rs 4,750 crore, was listed by Embassy Office Parks in April 2019, supported by the Bengaluru-based Embassy Group and global investment firm Blackstone.

Last August, K Raheja founded the country’s second REIT with support from Mindspace Business Parks to raise Rs 4,500 billion.

Global investment firm Brookfield launched the country’s third REIT this year to raise Rs.3,800 billion. The real estate group DLF is also making its rental arm DLF Cyber ​​City Developers Ltd (DCCDL) REIT-ready.