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Ascendas, a leading business space solutions provider, plans to more than double its current portfolio of 17 million square feet in India to about 39 million square feet in next five years, Vinamra Srivastava, CEO — India Operations and Private Funds, said.
The bulk of this expected portfolio growth in India in the coming years is likely to get housed under its existing Singapore-listed REIT Ascendas India Trust (AIT), Srivastava told BusinessLine .
AIT already owns 80 per cent of Ascendas’ portfolio in India, valued at $2.17 billion (S$3 billion).
The current Ascendas’ portfolio of 17 million square feet in India — split between office space and warehousing — is spread over six cities — Bengaluru, Chennai, Hyderabad, Pune, Mumbai and Gurugram.
“We already have a REIT in Singapore. There is no plan or an immediate need to float a REIT in India. We will continue to grow through our REIT in Singapore. Rather than having multiple REITs and spreading ourselves thin, we would have one REIT and make it bigger and bigger,” Srivastava said.
Asked what’s preventing Ascendas from floating a REIT in the Indian market, he noted that the presence of an existing REIT in Singapore brings benefits such as “lower cost of capital and a far more mature investor ecosystem”.
“Nothing is holding us up. It’s just that we already have a REIT in Singapore that serves the purpose. If we did not have one in Singapore, we could have looked at India,” he said.
Besides the India-focussed REIT (AIT), Ascendas has two private funds (one in partnership with GIC Singapore for development of IT parks, and the second with Temasek for logistics). It also uses funds out of its own balance sheet.
In the developed world, owners of commercial properties, such as retail, office, industrial, hotels and healthcare, have traditionally adopted REITs structure due to its inherent benefits.
The benefits include single level of taxation, easier access to low-cost capital and higher valuation attributed by capital markets.
Although SEBI has put in place a REIT framework, this product has not taken off in India despite some initial success (Embassy). Part of the reason could be the complex tax system around REITs, say market observers.
Meanwhile, Ascendas, which is a member of CapitaLand Group, has commenced operations of its new IT Special Economic Zone, International Tech Park Gurugram (ITPG) in the National Capital Region (NCR) with more than 60 per cent of the one million square feet operational space being leased by four leading IT corporations — Admiral Technologies (IT services and technology support provider), Optum (the health services platform of UnitedHealth Group), SoftwareONE (a platform, solutions and services company), and Toluna (insights on demand provider).
Optum is the biggest tenant having leased 455,000 square feet of the operational space.
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