REITs are a great asset class in theory, but they will be good investments only if they are managed and governed well. Based on recent track record, I strongly believe that this asset class is doomed to fail in India unless regulators make significant changes to the way they are structured here.
The biggest problem in my opinion is that REIT managements have consistently betrayed one of the most important and fundamental principles of management: to always act in the best interest of shareholders. In fact, I would argue that they have actively destroyed value for shareholders, only to benefit their sponsors - primarily by diluting existing shareholders through underpriced preferential allotments, to acquire potentially overpriced assets from sponsors. I am sure that in a more mature jurisdiction, they would face legal consequences for the kind of actions they have done here.
(Perhaps I am guilty of over-generalization here, but Indigird InvIT is the only entity from the REIT/InvIT universe in India I would consider as an exception to this.)
Potential solutions? Perhaps mandating the NAV as the minimum floor prices for equity raises would help. Or the entire manager/sponsor/trustee structure need to be changed.
Regarding Embassy: I exited all my remaining holdings the day they announced the equity raise. (I had trimmed a significant portion a few months ago when it appeared overvalued compared to peers.) I will consider adding a position again after the QIP is done.
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