The new debutant on the markets today is Embassy Office Parks REIT. Unlike MSTC it did better, getting listed at Rs.300 on the BSE, the same as the IPO price. It soon climbed to Rs.317 levels and is now quoted at around the same levels.
This IPO was subscribed 2.57 times on the last day. 4 US investor groups had committed Rs. 876 crore (at Rs. 300 per unit) to the issue as strategic investors, with a 6 month lock-in.
As we had pointed out in our New Issue Analysis, this is mainly a “HNI” issue. 75% of net issue was reserved for institutional investors and balance 25% for non-institutions, mainly HNIs, as minimum ticket size was Rs. 2.4 lakh (800 units at Rs. 300 each), while market parlance restricts retail participation to up to Rs. 2 lakh.
Our Analysis had said, “It is essential to understand that REITs offers the risk of volatility in returns, with down side range at 7% and upside more-or-less capped at about 14%, on an average. Since these are pre-tax returns, investors must understand that post-tax returns range between 5.75-12.00%, depending on their respective income tax slabs, holding period, other sources of income etc. Thus, REITs are not suited for all.”