Blackstone, others gear up to list REITs as India finalises rules

NEW DELHI – Blackstone Group(BX.N: Quote, Profile, Research) and its partner, Embassy Group, are laying the groundwork to cash in on their property holdings by setting up India’s first real estate investment trust (REIT) and listing it on one of the country’s stock exchanges.

The move comes as Prime Minister Narendra Modi’s government works to finalise rules as early as next month that will govern the trusts. The finance ministry is expected then to clarify tax rules for REITs in the budget, people with direct knowledge of the matter said.

The world’s biggest property investor and Embassy have a joint portfolio of more than 20 million square feet of offices in India, which is likely to help value their REIT at $2 billion, said Jitendra Virwani, chairman of Bangalore-based Embassy.

Listing REITs gives companies like Blackstone, The Xander Group, an emerging markets investor backed by the Rothschild family, and private equity firm Red Fort Capital, which counts Abu Dhabi Investment Authority among its investors, an attractive option to exit some of their investments.

“We are actually gearing up because we feel the pace the government is moving at is faster than what we would want, so it is better to be prepared much earlier than later,” said Virwani, who was set to meet Blackstone on Thursday to draw up a plan for the listing.

A spokeswoman of the tax department did not answer requests for comment. Blackstone did not respond to a request for comment.

The long-awaited move by India will be implemented by the country’s market regulator after the ministry clarifies tax rules to transfer assets into a separate vehicle before listing the trust, which had triggered worries over double taxation.

Implementing REITs will also be one early sign from Modi of how he wants to bolster the economy, which is suffering its longest spell of under-5-percent growth since the late 1980s.

India issued draft regulations for REITs in 2008, but was forced to shelve the plans after the global financial crisis dried up investor interest and an economic downturn dimmed the outlook for real estate investments.

If REITs are approved, India will follow China, where regulators in April approved the first property trust. The absence of REITs in China and India made Singapore and Hong Kong the preferred markets for listing property assets in the region.

REITs, listed entities that invest mainly in leased office and retail assets and distribute most of their income to shareholders as dividends, will give developers a new avenue to raise funds by allowing them to sell finished commercial buildings to investors and list them as a trust.

MORE LIQUIDITY

Between 2008 and 2013, private equity funds invested more than 452 billion rupees ($7.6 billion) in Indian real estate, of which more than a third was spent on office and retail assets, according to data from Cushman & Wakefield, an international property consultant.

“If there is more liquidity in the market, if people believe they have clearer exit possibilities, obviously it is helpful to any investor,” said Siddharth Yog, managing partner at Xander.

“If REIT laws came into being and a potential REIT listing in India was possible, it could be one of many potential exit strategies that could be explored,” said Yog, adding that REITs, however, will not dictate the company’s investment plan.

In 2012, Blackstone paid $200 million for a 50 percent stake in three office assets managed and owned by Embassy and mainly located in Bangalore. Earlier this year Blackstone and Embassy hived off their portfolio of assets into a separate vehicle, taking their first step towards listing a trust in India.

The portfolio, leased to tenants like Microsoft (MSFT.O: Quote, Profile, Research), IBM (IBM.N: Quote, Profile, Research) and Goldman Sachs (GS.N: Quote, Profile, Research), generates an annual rental income of 8 billion rupees and Virwani expects this to rise to 10 billion rupees by the time it lists a REIT.

“To have a brand like Blackstone along with us will help us market the REIT and get a better valuation.”

Source: Reuters, By Aditi Shah (Additional reporting by Rajesh Kumar Singh; Editing by Sumeet Chatterjee and Matt Driskill)

Training Program on ‘Contract Management’ Conducted by NIREM

A two-day management development program on ‘Contract Management’ was conducted by NIREM for Mahindra World City, Jaipur on 20-21 May, 2014. Managers from diverse functional areas such as contracts, legal, MEP, IT etc. participated actively in the program.

The program focused on tender processing, contract management & administration, Key Performance Indicators, Contract Reporting, Contract Closeout, Claims, Disputed & Settlement, Alternative Dispute Resolution etc. Participants actively participated in the program and were especially interested in topics like time and cost escalation and resulting claims and settlements. Another important topics that was actively debated was the tender process and management.

Since the faculty members were highly experienced and included former Additional Director General of CPWD and Director of a leading construction company, they could throw light on each aspects of contracts. Actual and real life examples of contract clauses, claims, disputed, settlements etc. were the highlight of the two days of the training.

Mahindra Word City (Jaipur) Limited, a 3000 acres SEZ, is a joint venture between Rajasthan State Industrial Development & Investment Corporation Limited (RIICO- A State Government Enterprise) and Mahindra Lifespace Developers Limited (a Mahindra Group Company). The Project has multi-sector SEZs and Domestic Tariff Area.

NIREM is the leader of real estate education in India. It offers classroom training, distance learning programs, workshops and in-house training for companies in real estate, housing finance and construction sectors.

NIREM focuses on conducting need based training program various topics related to real estate, housing finance and construction sector. In the series, NIREM is organizing a training program on ‘Property Documentation’ on 15^th July, 2014 at New Delhi. For further details, please contact at 07827884220 or Nirem.india@yahoo.com

SEBI demands tax concessions on real estate investment trusts

Seeks clarity on taxation of FIIs in infrastructure corporate bonds

Indivjal Dhasmana  |  New Delhi 

June 21, 2014 Last Updated at 12:18 IST

Ahead of the Budget, the Securities and Exchange Board of India (SEBI) has taken up with the government taxation issues for the proposed Real Estate Investment Trusts as well infrastructure  corporate bonds. 

"We have come out with a discussion paper on Real Estate Investment Trust and are hoping to get it implemented soon.  Our rules are ready, we have taken up with the government that these must be given a pass-through certificate status so far as tax status is concerned," SEBI chairman U K Sinha said at a summit organised by Skoch Consultancy Services. 

Sinha expressed the hope that the government will consider the demand favourably. 

"The moment there is a clarity on that, we will come out with our regulations," he said.

Sinha also  wanted a tax clarity on infrastructure corporate bonds for  foreign institutional investors (FIIs). 

"In the infrastructure sector, if a bond is issued and there is a FII, which is investing in that, what is the level of tax with that entity? If  it is vastly different from the withholding tax which is imposed on others, should there be different set of rules for FIIs and domestic institutional investors? These are the issues we are looking at," Sinha said. 

He  also  wanted the government to enact a  law  to replace  an ordinance which provides  SEBI the regulatory jurisdiction of  all  unregulated entities  that take  deposits of at  least  Rs  100  crore.  

"An ordinance is an ordinance. It has a limitd life. I am hopeful that the government will consider that this ordinance is converted into an act very soon," he  said.    

The SEBI chairman said there are still a large number of unregulated fund raising activities. These are coming under various names--chit funds or nidhi companies, housing schemes. 

"That menace has not still been fully controlled."

Sinha disclosed that  since the  ordinance  was promulgated, SEBI has taken action in more than 25 cases. "We have passed our orders, we have stopped them from raising money." Source: Business Standard

NIREM organized training program on 'Effective Marketing of Properties to NRIs'

NIREM Institute of Real Estate Management conducted a one-day training program on ‘Effective Marketing of Properties to NRIs’ at Delhi on 27^th May, 2014. It was a huge success considering the participation from top property developers, property consultants, online real estate companies, media etc.

Few of the organizations that sent their senior management team for this training program are Emaar MGF, OMAXE, Times of India, Magic Bricks etc.

While starting the program, the Program Director Dr. Pinaki Dasgupta said “the Indian Diaspora (NRI & PIO) is 25 million strong, spread across all continents and most countries of the world and possess great potential for real estate developers. NRI property buyers and investors become all the more important for Indian property developers and brokers because of the ongoing slowdown in the domestic real estate market. However property marketing firms need to know much about NRI property buyers and investors in order to market their properties successfully especially about their financial profile, investment trends and preferences, best marketing strategy to reach such targets. These issues are being covered in today’s training program on NRIs”.

On completion of the program, participants expressed their satisfaction over the newly found knowledge about NRIs and their investment trends and preferences. One of the participants said that now he would target African NRIs because of the insights about them received during the program. However another participant was of the view that now it would be much easier for him as well as his organization to target NRIs in Bay Area, US because of the efficacy of penetration of social media discussed during the program.

Overall, the program was organized quite successfully especially because of the trainers who were expert5 in their domain area such as NRIs, international marketing management, international marketing of properties, social media. Participants were quite interactive that added to the success of the program.

NIREM conducts similar need based and market oriented programs and in series the next is a training program on ‘Property Documentation’ scheduled on 15^th July, 2014. Interested participants may get in touch with NIREM at 07827884220 or mail to nirem.india@yahoo.com

Training Program on Effective Marketing of Properties to NRIs

NIREM is organizing a one-day training program on 'Effective Marketing of Properties to NRIs' on 27th May, 2014 at Delhi.

The meteoritic rise of real estate sector in India has not only caught the attention of Indian middle class but also the NRIs, spread all across the globe. There are 25 million people in the Indian diaspora around the world, most of whom are business owners with a net worth of US$1 trillion. Overseas Indians remitted US$70 billion to India in 2013.

The NRI market therefore today holds huge potential for Indian real estate developers and property consultants.

However managing a transaction related to NRIs requires a real estate professional with a unique knowledge base and skill set not only about the property transaction but also about the global business environment involving NRIs, their social and economic profile, investment and transaction trends, marketing strategy, knowledge of markets, elements of international transactions etc.

This requires real estate professionals who want to tap NRI property buyers and investors to embark on a specialized training program that can improve their knowledge about NRIs and the NRI market.

It is with the above objectives NIREM is organizing a one-day training programs on ‘Effective Marketing of Properties to NRIs’ on Tuesday, 27^th May 2014 at New Delhi.

The program director is Prof. (Dr.) Pinaki Dasgupta, Associate Professor of International Marketing, IIFT (Indian Institute of Foreign Trade), New Delhi. Prof Dr. PSN Rao, Chairman, National Association of Realtors (NAR-India) will manage one of the key sessions of the program.

This one day training program will help participants plan a better property marketing strategy and sell properties more effectively.

Prior registration in the program is mandatory. Early birds discount of 10 per cent is offered to those who register before 02^nd May 2014. Details of the program are available at www.nirem.org Interest participants may also mail to NIREM at nirem.india@yahoo.com or can call at 07827884220.