Property Share Investment Trust—India's First SM REIT—Opens IPO To Raise Rs 353 Crore

Property Share Investment Trust, India’s first registered small and medium real estate investment trust or SM REIT, has opened its initial public offering on Monday to raise Rs 353 crore. The offering consists of investments into a commercial property located on Bengaluru, Propshare Platina, according to the red herring prospectus for the offer.

The IPO consists entirely of a fresh issue, with no offer for sale. The issue opened for subscription on Dec. 2, 2024, and will close on Dec. 4, 2024. The allotment of shares is expected to be finalised by Dec. 5, 2024, with the tentative listing date set for Dec. 9, 2024, on the BSE and NSE.

The REIT will purchase the office property, currently owned by US-based tech company 24/7 AI, and lease it back to the seller at 9% rental yield for the first year. The lease agreement will span a period of nine years. Notably, this marks a step in furthering the reach of SM REITs, which target smaller and medium-sized real estate properties as compared to large commercial properties.

The REIT will function under the legal framework of India’s REIT Regulations, ensuring compliance with all necessary rules, and the units will be listed on the BSE and National Stock Exchange for trading, the company said in its offer papers filed with SEBI.

ICICI Securities Ltd. is the book-running lead manager for the IPO, while Kfin Technologies Limited will act as the registrar for the issue.

The minimum ticket size for investment is set at Rs 10 lakh, while the upper limit is Rs 10.50 lakh in line with regulations governing the entry point for retail investors in such offerings.

Incorporated in June 2024, Property Share Investment Trust is a SEBI-registered SM REIT. The Trust’s first scheme, PropShare Platina, includes six wholly owned special purpose vehicles as per REIT regulations. The trustee for the Property Share Investment Trust is Axis Trustee Services Ltd., which will oversee various functions, including acting as the debenture trustee, security trustee, and facility agent.

A small and medium REIT refers to a real estate investment trust that focuses on investing in small and medium-sized real estate assets, rather than large-scale developments typically seen in more prominent REITs. These could be smaller residential or commercial properties, retail spaces, or other real estate sectors that are more accessible for smaller investors.

These types of REITs are designed to pool capital from multiple investors to invest in income-generating real estate, offering them the opportunity to invest in the real estate market without the need to own properties directly.