The initial public offering (IPO) of India’s first Real Estate Investment Trust (Embassy REIT) was subscribed 2.58 times,with the share sale generating a demand of over Rs 5,300 crore.
REITs are similar to mutual funds.While mutual funds provide for an opportunity to invest in equity stocks,REITs allow one to invest in income-generating real estate assets.
REITs raise funds from a large number of investors and directly invest that sum in income-generating real estate properties (which could be offices,residential apartments,shopping centres,hotels and warehouses). The trusts are listed in stock exchanges so that investors can buy units in the trust.REITs are structured as trusts.Thus,the assets of an REITs are held by an independent trustee on behalf of unit holders.
The investment objective of REITs is to provide unit holders with dividends,usually generated from capital gains accruing from the sale of the commercial assets.Securities and Exchange Board of India (SEBI) mandated that all REITS be listed on exchanges and make an initial public offer to raise money.
There are three types of REIT available which are (a)equity REITs which purchase,own and manage income-generating properties (b)mortgage REITs which lend money directly or indirectly to real estate owners and (c)hybrid REITs which are a combination of the first two.
Initial public offering is the process by which a private company can go public by sale of its stocks to general public.It could be a new,young company or an old company which decides to be listed on an stock exchange and hence goes public.