I’ve discussed REITs many times on this thread and across this forum. I was invested in all 3 - however I moved out of them as I did not see myself making 15%+ XIRR on those, so re-deployed to more attractive growth opportunities. I currently don’t hold any REITs.
Sharing some of the old posts on REITs
Thanks for starting the thread @dd1474 . I’m also fairly bullish on the long term investment prospects for REITs at current valuations given the hugely favorable demographics (young population, 5-10 million joining the workforce each year for the next decade at least, etc.), cost arbitrage (outsourcing - India has approx. 50% market share of all global captives, 10-20% office rentals compared to west/APAC and cheaper labour) and market share consolidation towards grade A office suppliers.
Anywa…
gurjota:
I actually like both the REITs and I’m not averse to investing in both. However, there are a few reasons I’ve chosen Embassy for now:
Valuation - Trading 8% discount to fair value where as Mindspace is at par or higher than fair value
Cash Distribution - Embassy has been very good in more than 99%+ distributions. Mindspace has not yet started the cash distribution, expected from Q3 onwards - so a little uncertain on what the yield will come out to
Mindspace is a relatively new listing and while it’s income growth appears a little better in RHP, would really like to see it continue as a listed REIT before taking the plunge
Bangalore market and personal bias - Bangalore is the tech hub of India which is still growing at 7-9% CAGR in commercial office space. Also I’ve personally stayed inside Embassy Tech Village for many months while working on a project in Bangalore. Have seen first hand the quality of offices and tenants occupying their offices.
Will relook at Mindspace as they come out with Q3 numbers and may also invest in it.
gurjota:
Embassy Office Parks REIT - 3.5% allocation at Rs. 349.5. Read quite a lot about REITs over the weekend and I think this is a great way to diversify the investment portfolio along with exposure to the growing commercial real estate market (especially Bangalore). Embassy Office Parks has close to 50% rentals from companies in technology sector and 40% from Fortune 500. Even during the worst phase of the Pandemic Q1 FY21, it collected 99% of rentals. 10 year Investment objective - Expect yearly cash distribution at 6-7% yield along with 10-12% CAGR capital appreciation as investors and markets get more familiar with REITs. Can expect more and more REITs to hit markets over the next few years and potentially have a REIT bubble few years from now (happened in USA in mid 1990s). Interesting fact - REITs form 96% of the total Real Estate market cap in USA.
