Embassy REIT: Is this “Blackstone” promoted REIT is real diamond?

@Amit2saxena
The distribution from REIT need to seen in context of investors base post tax yield. Generally, REIT is more of investment vehicle for institutional investor and HNI as compared with Retail investors. While tax rate may for foreing investor based on jurisdicton of its registeration, for Indian investors, most of investors would be in marginal highest tax slab in my understanding.

Brookfield distribution for Q4FY23 was Rs 5 (Rs 2.66 Capital return and balance Rs 2.34 interest). So only Capital return portion has tax deferred benefit while nearly half distribution would be taxable at marginal income tax. Assuming 30% income tax, the post tax yield for Brookfiedl REIT investor would be Rs 2.66 Capital Return+ ~ Rs 1.64 Interest (post 30% income tax) per quarter or ~ Rs 17.2 per annum, resulting in post tax yield of 6.56%.

In case of Embassy REIT, Q4 distribution was Rs 5.61, (Taxfree Dividend Rs 2.81, Capital retrun Rs 1.94 and Taxable interest 0.86). Assuming 30% marginal tax, per quarter post tax distribtution would be ~ Rs 5.35 per quarter or Rs 21.41 per annum, giving post tax yield 7.3%.

Hence, in my view, at current level of prices, Embassy Post Tax yield are higher than Brookfield. However, Embassy group promoter are facing some liquidity issue and the management did not released guideance for distribution in Q4FY23 con call (normally the practice followed by the REIT in past) has added uncertainity in investor mind. Even Blackstone has been selling REIT units frequently. The latest MD in Embassy REIT resigned within 12 months of appointment. The business outlook also appear more uncertain then in past with incerasing trend in work from home IT sector, at least in global market, which resulted in major decline in price of Global REIT.

All thease factor contributed to decline in Embassy REIT price.

Disclaimer: I have investment in Embassy REIT and hence my view may be biased. I have not done any trade in last 1 month. I may change my investment in Embassy REIT (including completely liquidating my holdings) without informing the forum members. Reader shall consult his/her financial advisor before making any investment decision. I am not SEBI registered advisor. I am not suggesting any investment action in Embassy REIT.