• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

First Window for Listed Indian Real Estate a Litmus Test for the Market

India's property market is increasingly institutionalized, and now it's available to retail investors, too.
By ALEX FREW MCMILLAN
Apr 05, 2019 | 12:00 PM EDT
Stocks quotes in this article: BX, GOOGL, JPM, HLT, BAM

Indian real estate has been a no-go area for investors since, well, the inception of the nation.

I recall an early conversation with a portfolio manager from LaSalle Investment Management on the sidelines of a conference in the convention center here in Wan Chai. Since Chinese real estate is such hot property, would LaSalle, one of the world's largest institutional property fund managers, dabble in Asia's other 1 billion-population nation?

He laughed, shook his head, and rolled his eyes. Buying just one building was way too much work. Ownership had usually been subdivided and subdivided again among family members through various generations of inheritance. Corralling them to make a collective decision was a lifetime's work. Building a portfolio would be impossible.

Now, the work has been done for you. India's property market is increasingly institutionalized, and now it's available to retail investors, too.

The world's largest private-equity investor, the Blackstone Group (BX) , has paired with Indian developer the Embassy Group to list India's first real-estate investment trust. It's been a long time coming, amid many a false start, but the very first I-REIT has finally arrived.

This offers regular punters an easy way into Indian office space, with a hotel kicker. The listing doesn't yet have a U.S. counterpart, but is worth watching since I'm sure Blackstone has that in its plans.

Embassy Office Parks REIT BO:EMBA rose 3.7% on debut at the start of the week, and is ending it up 9.3% in late Friday trade as I write. Not a skyrocket ascent, certainly, but the offering is off the ground, and the performance suggests it has been properly priced.

Overseas investors were piling into Indian shares in February and March. And it has been overseas institutions, as well as wealthy individual Indian investors, who have been the backbone of support for this new REIT.

It is far from assured it will be a success. The Embassy Office Parks REIT has taken five years to make it to market. Previous attempts to list Infrastructure Investment Trusts in India began with great fanfare, then performed terribly.

Indian investors are also treading gingerly as the world's largest democracy prepares for nationwide elections. That is a chaotic and laborious process, as you'd expect in a country that still requires most paperwork to be filed long-form.

If you think the U.S. election cycle is long, consider that the ballot process alone in India takes more than a month. More than 900 million possible voters will participate in a seven-stage system.

Voting in India starts on April 11 and runs until May 19. Results are expected May 23 - and expect them then to be contested!

The Embassy Office Parks REIT counts Google (GOOGL) and JP Morgan (JPM) among its tenants. Its portfolio consists of seven office parks and four office buildings, in Bangalore, Mumbai, Noida and Pune.

That composes a total holding of 32.7 million square feet of high-grade office space. It also has two completed hotels, with another two under construction, three under the Hilton (HLT) brand and one a Four Seasons.

The listing gives Embassy Office Parks REIT a market value of US$3.7 billion. The offering was oversubscribed by 2.57 times, US$687 million in shares priced at 300 rupees, with a hefty share going to cornerstone investors and institutions.

Blackstone is the biggest of big hitters in Indian real estate these days, with three other joint ventures besides its deal with the Embassy Group. That gives it a portfolio of 78 million square feet.

Other international property power brokers such as Brookfield (BAM) is also building substantial portfolios, the Canadian real-estate asset manager now owning 24 million square feet of Indian office space.

Institutional investors such as the Dutch pension fund APG, the investment authorities of Abu Dhabi and Qatar, and the Canada Pension Plan Investment Board, have all formed platforms with developers to build portfolios in India, investing US$275 million on up.

So Indian stock brokers and money managers are watching to see if this REIT continues to trade successfully. If it does not, India's REIT experiment may stall yet again, stunting the growth of the nascent institutional real estate market.

(Alphabet and JP Morgan are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells GOOGL or JPM? Learn more now.)

Will You Have Enough Money to Retire?

Want to learn about retirement planning from some of the nation's top experts? Join TheStreet's Robert "Mr. Retirement" Powell live in New York on April 6 for our Retirement Strategies Symposium. For a limited time, tickets are available for $99 for this full-day event. Check out the agenda, learn about the speakers and sign up here.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Alex Frew McMillan had no position in the securities mentioned.

TAGS: Investing | Markets | REITs | Trading | India

More from Investing

Is This Market Really So Miserable?

Helene Meisler
May 25, 2022 6:00 AM EDT

Let's look at these two weeks of pain and see if it's as awful as we think it is.

Buying Momentum SNAPs Under Weight of Recession Worries

James "Rev Shark" DePorre
May 24, 2022 4:26 PM EDT

The Dow held its own, but under the surface it wasn't so pretty as the correction churns on.

Meta Platforms: I'm Looking at the Charts, Not the Headlines

Bruce Kamich
May 24, 2022 2:30 PM EDT

Buyers have been attracted in the $180 area in March, April and now.

Boston Scientific Could Be Wicked Good in This Kind of Market

Brad Ginesin
May 24, 2022 2:13 PM EDT

Here's why this healthcare stock is a potential port in the storm for investors.

Bettin' a Buck on Devon

Mark Sebastian
May 24, 2022 1:39 PM EDT

Here's where I see Devon Energy going and how to play it.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 02:24 PM EDT PAUL PRICE

    An Interesting Chart

    I'm betting heavily that stocks will be way up aga...
  • 10:10 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    "Market Timing for Dummies"
  • 01:44 PM EDT STEPHEN GUILFOYLE

    Stocks Under $10 Portfolio

    We're making a series of trades here.
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login