Tata Realty and Infrastructure looks to launch REIT after 2-3 years

Tata Realty and Infrastructure Ltd will scale up its commercial real estate portfolio to at least 12 million square feet over the next 2-3 years before considering launching real estate investment trust (REIT) public issue to monetise its rent-yielding office assets.

In an interview with PTI, the company's Managing Director (MD) and Chief Executive Officer (CEO) Sanjay Dutt said the company has 7 million square feet of rental commercial portfolio, almost all are office assets, and it is making huge investments on 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 feet IT park project in Navi Mumbai in partnership with UK-based investment firm Actis.

 

Asked whether the company would at some stage look at floating REIT public issue, Dutt said: "We will. We already have 7 million square feet. So, technically we can do it (REIT) today."

"But we are thinking that over the next 2-3 years once we scale up our portfolio, then study the market, discuss with our partners and then think of REIT," he said.

In the next 2-3 years, Dutt said the company intends to expand its portfolio to "at least 12 million square feet" before considering REIT.

The occupancy level in its operational commercial buildings currently stands at around 95 per cent.

At present, there are three listed REITs -- Embassy Office Parks REIT, Mindspace Business Parks REIT and Brookfield India Real Estate Trust -- on Indian stock exchanges.

Apart from IT parks and data centres, Tata Realty will also make investment in development of shopping mall projects in major cities like Delhi-NCR, Mumbai and Bengaluru.

"We will continue to invest in retail also," Dutt said.

The company had in late 2019 sold two shopping malls in Amritsar and Nagpur to Singapore-based Virtuous Retail South Asia for Rs 700 crore.

Dutt said the company had divested these retail assets as it wanted to focus on major cities.

Out of the total 7 million square feet portfolio, the company currently has a 3,00,000 square feet multi-level car parking cum retail project in Gurugram, Haryana.

As part of its expansion plan, Tata Realty on Saturday laid the foundation of its new IT park project 'Intellio Park', spread over 47.1 acre land at Ghansoli, Navi Mumbai.

"On this land parcel, we are doing 7 million square feet of development, predominantly IT space and data centres with some complementary retail and non-IT office space," Dutt said.

"The total investment on this project is Rs 5,000 crore. This is Tata Realty's largest single investment in office real estate," he highlighted.

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

"We are already in the market to pre-lease 5 lakh square feet or even more. We can do built-to- suit for corporates. We are in discussion for development of data centres," he said.

The Navi Mumbai area commands a monthly rental of Rs 60-70 per square feet. Annually 2-3 million square feet office space gets leased in Navi Mumbai.

Tata Realty and Infrastructure Ltd, which is a 100 per cent subsidiary of Tata Sons, has an extensive portfolio of over 50 projects across 15 cities.

The company has developed over 15 million square feet of commercial projects and has around 12 million square feet of projects under development & planning.

REIT, a popular instrument globally, was introduced in India a few years ago for attracting investment in the real estate sector by monetising rent-yielding assets.

It helps unlock the massive value of real estate assets and enable retail participation.

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

In August last year, K Raheja backed Mindspace Business Parks launched the country's second REIT to raise Rs 4,500 crore.

Global investment firm Brookfield launched the country's third REIT this year to raise Rs 3,800 crore. Realty major DLF is also making its rental arm DLF Cyber City Developers Ltd (DCCDL) REIT-ready.