Blackstone-backed India REIT wins over investors amid low rates

India’s first ever real estate investment trust has outperformed peers since its debut in late March, helped by a low interest rate environment that’s forcing investors to look elsewhere for yield. Blackstone Group LP-backed Embassy Office Parks REIT has risen 21% since its listing, beating indexes that track REITs in Singapore and Japan. “This kind of return isn’t usual from a REIT,” said K V S Manian, an executive director at Kotak Mahindra Bank Ltd. “A large part has to do with the benign interest rate environment in India now.” Interest rates in India are on a downward trajectory after the central bank cut borrowing costs three times since January. Economists say further easing is expected. REITs offer a fixed return from a pool of rent-yielding assets, along with the prospect of capital appreciation. Embassy operates around 33 million square feet of office space and has marquee tenants including Microsoft Corp. and Rolls-Royce Holdings Plc. The REIT should see compound annual growth in rental income of around 16% through 2023, analysts at Kotak Securities Ltd. wrote in a report last month.