Supertech readies plan for REITs, aims to list retail properties to raise around $80M

North-based real estate developer Supertech Ltd is the latest company to join the queue for listing assets under real estate investment trust (REITs), as it plans to pool half a dozen malls to raise as much as Rs 500 crore ($79.3 million), a top company executive told VCCircle.

The company may put together six of its fully operational and leased out malls and list them under the proposed REIT.

“We have hired a consultancy firm to help us create a framework for this. We will be listing 20 lakh sq ft of space across six malls in Northern India,” said RK Arora, chairman, Supertech Ltd.

The company has Shopprix Mall in Meerut, Ecobazaar I & II in Noida, The Pentagon Mall in Haridwar, Metropolis Mall in Rudrapur and Doon Square in Dehradun. It has so far developed around 30 lakh sq ft of commercial projects, with a major chunk belonging to retail.

The company, which will be putting out only malls for listing, aims to raise Rs 500 crore in the first round. It plans to use a good portion of the corpus in paying off existing debt and the rest for ongoing projects.

Arora declined to share the debt the company has on its books. However, he mentioned that the company clocked sales realisation of Rs 2,800 crore in financial year ended March 31, 2015.

On the residential front, it recently launched a massive 140 acre township project on Sohna Road in Gurgaon. It had purchased the land parcel from its peer Parsvnath Developers for roughly Rs 750 crore.

As for REITs in India, a slew of developers and PE funds have shared their plans to list assets since the government announced final set of guidelines in August last year. Most recently, Religare Global Asset Management (RGAM), which has set a real estate focused PE arm, said that it will be creating a REIT vehicle to raise Rs 250 crore on an asset pool of Rs 500-700 crore.

REITs can provide for an important mode of exit for investments in commercial realty assets.

In the Union Budget 2015, Finance Minister Arun Jaitley promised to rationalise capital gains tax regime for sponsors of REITs and accorded pass-through status on rental income of REITs. However, the stakeholders feel there are still some challenges in terms of taxation but expect to get clarity in the coming months.

Other firms which are working on listing assets under REITs include home-grown private equity firm Red Fort Capital, southern realtor Embassy Group and PE giant Blackstone.

(Edited by Joby Puthuparampil Johnson)

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