RMZ may benefit from REITs
Commercial office space landlord RMZ offices aims high as it sets its sight on obtaining Rs 9,000 crore ($1.5 billion) through a Real Estate Investment Trust (REIT) either in Mumbai or Singapore. RMZ corporate vice chairman Manoj Menda has made it clear that this Bangalore-based developer is soon to be made public within 15 months, as it has started work with bankers to incur high potential returns from its rent yielding office buildings worth $3 billion.
Qatar Investment Authority is a large investor of this group, and its sovereign wealth minister has agreed to sell 50% stake in RMZ offices. Similar to the kind of investments that mutual funds provide for traded stocks, REITs provide an investment structure in real estate which is inflation indexed. Finance Minister Arun Jaitley’s maiden budget presenting positive tax moves, and the announcing of the guidelines from SEBI will enable the big-ticket listing of REITs to be off to a rocking start.
According to Menda, by July 2015, RMZ is to have a portfolio of 20 million leased office spaces generating $225 million net operating income with a further income of $19 million that is to be developed over the next five years. Inspired by the 14 times valuation on SGX of Singapore-based Ascendas, RMZ’s goal is to achieve 12 times valuation on the net income.
As RMZ is currently running on listings in both Singapore and India, they will decide on the listing exchange depending on which offers higher amount of returns to the shareholders. Menda feels that this is only possible once the Indian regulators have given more clarity to the taxation procedures.
Post the listing, the Menda family being the proud owners of RMZ would keep anywhere between 25 to 30%, while QIA and Baring Private Equity Partners are entitled to own the remaining 20 to 25%. A worthy investor of this development company, Baring would propel their ownership into REIT, hence staying true to the objective of providing a ‘liquid option’ to the prevailing investors.
Source: The Times of India
