Property Share files : Play quite a significant role in the country’s real estate sector, which is why Small and Medium-sized Real Estate Investment Trust, or SM REIT, grabbed all the headlines on Friday when it filed its draft papers with the Securities and Exchange Board of India. With ₹353 crores, the IPO is going to raise huge funds for the company as it taps into a new asset class in India’s burgeoning realty market. Proceeds from the IPO will be primarily used in acquisitions of the Prestige Tech Platina asset by Platina Special Purpose Vehicles. The IPO proceeds will be applied for general corporate purposes if there are any remaining amounts.
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An IPO, a new issue of Platina units, is how this IPO can be described as no existing shareholders are selling their stakes using an offer for sale. However, all the earnings will be derived through the newly issued units, which would be traded on the Bombay Stock Exchange. The IPO is being led by ICICI Securities Limited, which is a leader in the Indian financial services market. Further, Property Share Investment Trust and the Investment Manager, PropShare Platina has appointed Cyril Amarchand Mangaldas as the Indian Legal Counsel. Additionally, the company acts as the registrar to the issue to ensure that the process with respect to the IPO goes smooth and successfully. The trustee to the issue is Axis Trustee Services Limited, while PropShare Investment Manager Private Limited manages the entire offer.
Benefits for Investors in Key
Perhaps the most interesting aspect of this IPO is the fact that PropShare Platina would be the first SM REIT scheme in India. This unlocks fresh prospects for a wide range of investors. REITs help individual investors own units in large scale income-generating real estate properties, which otherwise would have been prohibitively expensive for them. With an SM REIT, the company is offering investors an opportunity to buy a share of a quality commercial property at a relatively small investment amount.
Investors can thus start by buying a ticket size of as low as ₹10 lakhs and therefore experience high-quality commercial real estate exposure by capital invested that perhaps be too limited for the purchase of full-fledged properties. This product is very attractive because it offers Grade A pre-leased commercial property that tends to produce stable and predictable yields. Co-owners or investors in this scheme will derive returns from rental income, giving way to alternative asset classes such as stocks and bonds.
As quoted by the Director
Hashim Khan, Director, Property Share, emphasized the gigantic opportunity the SM REITs have offered to the Indian market. He said, “With the launch of SM REITs, the regulator has introduced a regulatory framework for a new asset class to a diversified class of public investors. We believe PropShare Platina is India’s 1st SM REIT scheme and provides investors with an opportunity to invest in a Grade A pre-leased commercial property at a ticket size starting from ₹10 lakhs.” This statement represents Property Share’s value on the long-term returns of their REIT scheme, especially through providing smaller investors with access to high-class real estate.
The key feature of the transaction is PropShare Platina, an asset that comprises 246,935 square feet of offices in the Prestige Tech Platina office building, which has LEED Gold rating. It is located along Outer Ring Road, Bangalore, and the assumption is that it should be fully let to a US-headquartered market leader in the technology sector for a period of 9 years. It comes with a 4.6-year weighted average lock-in period and includes a 15% rent escalation every three years, so it is a very good investment opportunity.
Bangalore’s Outer Ring Road is quite famous for commercial real estate as it houses many multinational companies. Research carried out by Jones Lang LaSalle states that Outer Ring Road occupies around 34% of the office space in Bangalore, and is therefore the city’s biggest office market. The offices of Adobe, Amazon, Google, Samsung, CISCO, JP Morgan, Morgan Stanley, and Wells Fargo have already been formed in this region and attracted investors to this property. The building is located close to the new metro station, which is supposed to connect Outer Ring Road with the airport, thus being yet another added value and rather strategically located for both tenants and investors.
Prestige Group is one of the leading names in the Indian real estate market, but Prestige Tech Platina is a child of the same. It has kept a clean record of quality commercial and residential projects across the country and shall ensure high-quality tenants for this office space.
Expected Returns
The investors who participate in this scheme can look forward to significant returns. PropShare Investment Manager Private Limited expects to show a distribution yield of 9.0% in FY26, making it highly competitive with what is currently available in the market as an investment option. Yield refers to the percentage of a value investors expect to receive as income from that investment, typically rental payments. Income A guaranteed corpus can be expected with the lease agreement made by a US-based tech company.
Further, to sweeten the deal for early investors, PropShare Investment Manager Private Limited has announced a waiver of all annual management charges by the firm for the two years FY25 and FY26. This includes investment and property management charges. This means that for the initial two years, no fee regarding the management of the scheme will be levied from the investors. Hence, this plan will maximize the returns generated during the initial years for the investor. The fee will be 0.25% beginning FY27, which would be increased to 0.30% and onward in FY28. This incremental structure of fees shall provide the initial investors with the maximum benefit of the scheme during its initial period.
Moreover, Property Share has agreed to invest at least 5% of the units of the scheme equivalent to ₹17.6 crores from its own capital. This has reflected the confidence of the company again in the project as it is going to risk its own money with that of outside investors. It also ensures that the interests of Property Share get aligned with that of investors since both will enjoy returns in terms of success of the project.
Summing it all, this is a landmark event for the real estate investment market in India: Property Share raises Grade A commercial property equity for smaller investors at a fraction of its cost of outright purchase. PropShare Platina is the first SM REIT in India.
Prestige Tech Platina is the star in this portfolio, and it is a very attractive property in one of Bangalore’s most premier commercial locations. Prestige Tech Platina will have a major US-based tech company pre-leased under a lease agreement along with attractive rental escalations, hence allowing the investors to look forward to a steady income stream and competitive returns. The seriousness of this IPO is made even more appealing due to the introduction of fee waivers for the first two years along with investment in the scheme by Property Share.
The minimum investment option of ₹10 lakhs offered by this IPO will enable investors to invest in premium commercial real estate. According to Hashim Khan, this is a new asset class being now available for public investors with the launching of SM REITs.
For the investment seekers, whether interested or not, in diluting their portfolio with real estate investments, especially in such an explosive market such as Bangalore, this PropShare Platina IPO can be great space to explore. It is, in fact, a very unique vehicle for investment in real estate, considering its solid foundation and long-term lease agreements that are promising returns on investment.