According to SEBI (Real Estate Investment Trusts) Regulations, 2014 , REIT or Real Estate Investment Trust is a trust registered with SEBI to carry out the activity prescribed under SEBI (Real Estate Investment Trusts) Regulations, 2014.Funds are raised by issuing units to investors and amount so raised is invested primarily further in assets in real estates sector. Direct investments or investments through SPV/Holding Company are made in such assets of real estate. Unit holders are the people holding the units in REIT. Unit holders frequently obtain the income produced from the underlying assets of the REIT. The term REIT SPV/Holding company are the entities that develop or help to hold through real estate possessions. It can take the form of a joint stock company or a LLP. Real estate for the consideration of REIT Regulations means land and any permanently attached improvements to it, whether leasehold or freehold and includes buildings, sheds, garages, fences, fittings, fixtures, warehouses, car parks, etc. and any other assets incidental to the ownership of real estate but does not comprise mortgage. REIT can raise unit capital from stakeholders through issuance of units via initial offer. Such units are mandated to be registered on bourses. Further unit capital can be raised through issuance of units via follow-on offer, preferential issue, institutional placement and rights issue of units. REITs can also raise debt capital through issuance of debt securities. REITs are mandated to list the debt securities issued by them on registered bourses.
One of the most prominent REIT of India is BROOKFIELD INDIA REAL ESTATE TRUST. It is India’s only institutionally managed public marketable real estate vehicle. Backed by an associate of Brookfield Asset Management, one of the world’s prime alternative asset managers with approximately US$600 billion in assets under management, as of March 31, 2021, their aim is to be the foremost proprietor of high quality income creating marketable real estate possessions in significant gateway Indian markets, which have substantial barriers to entry. The key goal of the approach is to deliver attractive risk-adjusted total returns to their unitholders derived from:
- Steady yield maintained by the REIT Portfolio’s enduring contracted cash flows.
- Property level income growth that is embedded in the REIT portfolio through contractual rent escalations, mark-to-market headroom and in-situ development potential.
- Recognized outward development prospects with acquisition of the Identified Assets and the ROFO properties.
- Asset value appreciation, through constant investment and advancement of the possessions.
Following is the structure of the Investment trust
TRUSTEE
Axis Trustee Services Limited is the Trustee of the Brookfield India Real Estate Trust. The Trustee is a listed intermediary with SEBI under the SEBI (Debenture Trustees) Regulations, 1993, as revised, as a debenture trustee having registration number IND000000494 which is valid until suspended or cancelled by SEBI. The Trustee is a wholly owned subsidiary of Axis Bank Limited. The Trustee is involved in diverse facets of debenture and bond trusteeships, including, advisory functions and management functions. The Trustee also acts as a security trustee and is involved in providing services with respect to security creation, compliance and holding security on behalf of lenders. As the Trustee, it guarantees compliance with all statutory necessities and trusts in moral values and finest practices in corporate governance. It objects to offer superlative amenities in the industry with its well skilled and professionally capable staff with a sound lawful acumen.
The Trustee is also involved in providing services as
- A facility agent for multifaceted organized dealings with guidance on appropriateness of the transaction on operational aspects
- An escrow agent
- A trustee to alternative investment funds
- Guardian of credentials as a safe keeper
- A trustee to infrastructure investment funds
MANAGER
Manager – an associate of Brookfield Asset Management, has a management team with wide-ranging industry experience that supports to manage our office parks in India. It meets the suitability standards specified under REIT regulations (net worth not less than ₹100 million), with a net worth of ₹ 262.36 million, as of March 31, 2021.
As a real estate service company, it offers management services, with facility management and project delivery to the real estate possessions held by the Brookfield Group across India. Manager’s team has profound field knowledge and practice in managing these properties and has established a vigorous track record in bringing value. Since April 1, 2015, our Manager has leased 4.4 M sf and delivered 4.1 M sf of completed area within the REIT Portfolio.
Brookprop Management Services Private Limited is highly viewed in the real estate community and has widespread associations with an extensive range of occupants, brokers and lenders. Led by Alok Aggarwal (the Managing Director and CEO India office business of our Manager), Manager’s team contains of 59 devoted experts, as of March 31, 2021. The team has in-depth knowledge in real estate investments, asset management, research and property management, with the main decision-making personnel and essential team having an average of more than 25 years of practice in the real estate industry in India. As such, Manager has functioning and investing experience through manifold real estate cycles, offers treasured awareness and viewpoint into the portfolio management of present office parks as well as the guaranteeing of new investments.
TRUST
PORTFOLIO
REIT portfolio entails of five huge campus-style office parks located in crucial gateway cities. The possessions include Kensington, Powai, Mumbai; Candor TechSpace, Sector 21, Gurugram; Candor TechSpace, Sector 62, Noida; Candor TechSpace, Sector 135, Noida and Candor TechSpace, Rajarhat, Kolkata. Possessions stand out in their respective marketplaces thanks to their campus-format offering, tactical location, wide-ranging connection, high-quality provisioning, modern amenities, and environmental activities. These office parks’ standing has been enhanced further by acknowledged proprietorship, Manager’s industry-leading asset management methods, and a number of placemaking activities that have resulted in increased occupant involvement.
ADVANTAGES
The advantages arising out of the Brookfield India REIT are manifold. It offers excellent office parks, brilliant in size and located in areas that allows ease of conveyance in the hub of marketplaces of Kolkata, Noida, Gurugram and Mumbai. Exceptional strategy, expansion and operational values of the manager and sponsor aids in delivering all conducive functioning ecosystem , with modern infrastructure including maternal services, food and shopping outlets along with fitness services. Substantial cash flow is expected from the business as the portfolio consists of enduring tenancy profile with staggered terminations and weighted average lease expiry of 6.5 years. Escalation provision in contracts and long term lease also adds to the cash flow growth of the business. The growth opportunities have two sources. One is through NOI and second is through acquisition of supplementary properties. Conventional and far-sighted capital structure will aid to drive supplementary progress through value accretive acquisitions. Vigorous track record has been recorded in delivering value and in depth domain knowledge in handling the properties by the manager’s team.
The students of PGDM and PGDM(IB) of JIMS Kalkaji can utilise the above case and understand the dynamics of the working of a real estate investment trust. Detailed discussion can be done in the class with regard to the other aspects of REIT in India.
JIMS, Kalkaji
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