An overview of REITs dividends in India, Final hearing of Indiabulls and Embassy group, Adam Neumann's new startup Flow to revolutionize residential real estate.
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India’s 3 REITs, i.e Embassy REIT, Mindspace REIT, and Brookfield REIT have announced their quarterly REIT dividend results. Given below are the dividend reports of all the 3 REITs-
✍️ OUR TAKE -
📊 Embassy office park REIT’s YOY analysis-
Embassy has leased out 1.8 million square feet across 25 transactions. Out of which, 550,000 sq ft. will be leased out to J.P. Morgan on pre-commitment in FY 23, at Embassy tech space in Bengaluru. The REIT’s net sales stood at Rs 855.14 crore in June 2022 up 12.32% from Rs. 761.34 crore in June 2021. Let’s get an outlook on its you growth and NOI comparison-
📈 Mindspace business park REIT YoY analysis
has declared its net sales at Rs. 306 crores in June 2022 up 1.83% from 301.20crore in June 2021. Its quarterly net profit stood at Rs.280.20 crore in June 2022. Quarterly Net Profit at Rs. 280.20 crores in June 2022 up 0.72% from Rs. 278.20 crores in June 2021.
💹 Brookfield REIT
Operating lease rentals rose 26 % to Rs 200 crore over the corresponding quarter in the previous year. The company saw a 6 percent increase in organic growth due to the robust leasing to existing tenants and the addition of Candor tech space sector 62 in Noida (N2)
The Indiabulls real estate has cut its net debt by 54% which stands at Rs.464 cr. at the end of the June quarter which stood at Rs. 1,310 crores in March 2022. Furthermore, its gross debt fell from Rs. 1310 cr to Rs.739 cr.
In addition, the Embassy Group and Indiabulls merger, which was under process since 2020, will have its final hearing. A merger with Embassy is currently under NCLT review and the next hearing in Chandigarh is scheduled for September 8, 2022. The Competition Commission of India had approved the merger of Embassy group firms, Nam real estate, and Embassy one commercial property development with IBREL. However, the proposed merger plan for NAM Estates and Embassy One Commercial Property Developments is in the works, according to a report.
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💫 A sneak peek into the merger of Embassy and IBREL
The merger will create one of the leading market players among the listed companies, in terms of surplus from launched projects, land bank ownership, residential stock and planned area development in the country. The merged entity, which will have about 30 projects, will be owned 44.9% by Embassy Group, 26.2% by the existing public and institutional shareholders, 9.8% by existing Indiabulls Real Estate promoter group, and 19.1% by Blackstone and other Embassy institutional investors.
💫 Post-merger scenario-
Shareholders of the listed company will benefit from a balanced mix of residential and commercial development with visibility on near-term liquidity. The combined entity will have 80.8 million launched and planned development potential. The merged entity wil have 30 projects. Mumbai-based IBREL has a land treasure of 3,280 acres across top metropolises having a presence in Jodhpur, Vadodara, Delhi NCR, Vizag, and Indore. The merger will give an opportunity to monetize specific non-core areas and build their presence in prime locations. This will allow the companies to directly develop projects in potential areas, rather than wasting time in spotting land at first.
❓ How’s Indiabulls doing and why this merger?
The merger with the Embassy group will help Indiabulls to recover the losses. From its completed, ongoing, and upcoming projects, the company expects a net surplus of Rs 8,566 crore. This is because,
-In the first quarter of 2022: IBREL's sales bookings fell to Rs.297 crore from Rs 350 crore in the previous quarter.
- In April 2022: IBREL raised Rs.865 crore by issuing shares to institutional investors, mainly for land acquisition and debt reduction.
- In the last week of June: A consolidated net loss of Rs.51.95 cr was reported on a lower income for the quarter ended June.
There are Rs 12,736 crores of unsold inventory and Rs 3,030 crores of receivables from customers against units already sold, and it will cost Rs 7,201 crores to develop these projects.
After Adam Neumann’s WeWork, the founder has now announced the launch of a new real estate platform ‘Flow’ dedicated to revolutionizing residential real estate. The company has received backing of $350million from the world’s largest Venture Capital Firm Andreessen Horowitz.The investment has valued the startup at $1billion even before its launch in 2023. As announced on the startup's site, Flow will manage 3,000 apartment units that Neumann has purchased in Atlanta, Fort Lauderdale, Miami, and Nashville. It will reportedly offer a branded rental housing experience and the feel of community living. The service will also be available to third-party developers, according to DealBook.
✍️ OUR TAKE
💫 What’s flow, and how can it help the residential real estate sector?
Flow is a platform aimed to revolutionize the residential housing sector. Landlords can partner with Flow to manage their properties, just as the owner of a hotel might contract with a branded hotel chain. According to Andreessen Horowitz, Flow seeks to address modern housing problems - including the migration of people away from traditional economic hub cities due to the work-from-home culture brought on by the pandemic. By using the platform, the supply-demand gap in the residential real estate market can be mitigated. This can hugely help India’s leading micro markets like Noida, Gurugram, Navi Mumbai, etc. by helping increase sales and technology-based solutions in the housing market if the startup goes global.
❓ After WeWork, is Flow a trustable startup to look forward to?
Despite WeWork’s failure, which has reduced its value from $47 billion to $4 billion, the founders of Andreessan Horowitz have expressed confidence in Adam Neumann’s current project. Adam is a repeat founder and has returned with a new startup with some valuable experiences in the past. Also, he is not just the founder of WeWork, but the founder of normalizing taking office on lease and co-working. He might also contribute a lot to the residential sector and bring about an immensely positive change in the sector.
✨ What good will the real estate tech startups do for the industry?
In the modern era, it is still surprising to see that brokers and agents are quite slow at adopting technologies. This is because the real estate business is primarily based on relations with clients. But when you see the other side of the coin, real estate is an information-centric business too! This is why it's important for a real estate business to emphasize data and the efficiencies afforded by workflow and online collaboration. Hence, tech-based real estate startups are a need of the time, especially, since residential real estate needs to be heavily infused with technology. This will reduce the amount of stalled projects and frauds to a greater extent.
