Indiabulls Properties Plans $286 Million REIT Sale

Indiabulls Real Estate Ltd., India's fourth-biggest developer by market value, may raise S$388.3 million ($286 million) selling units in a real estate investment trust in Singapore, the first such sale by an Indian company.

Indiabulls Real Estate plans to sell 353 million units of Indiabulls Properties Investment Trust at between S$1 and S$1.10 apiece, according to an e-mail sent to investors. Billionaire Lakshmi Niwas Mittal, the world's fourth-richest man, agreed to buy 91 million shares.

Indiabulls is banking on rising demand for office space in Mumbai, India's main trading hub for stocks, bonds, commodities, diamond and bullion, and home to the nation's biggest companies. Office rentals in the city have doubled over the past two years, according to Knight Frank LLP. About 3 percent of offices in Mumbai are vacant, reflecting strong demand, Indiabulls said.

Mittal was among the initial investors in Indiabulls Financial Services Ltd., which last year spun off Indiabulls Real Estate as a separate company.

Ascendas Pte, the manager of Singapore's biggest industrial property trust, raised about $365 million after pricing shares in an Indian property trust at S$1.18 apiece in July last year.

India, the fastest-growing major economy after China, is forecast to expand as much as 8.5 percent in the year to March, according to the central bank. The economy has doubled in the past six years, growing an average 8.7 percent since 2003, according to Bloomberg data.

Initial Properties

The trust will initially acquire two properties being developed by Indiabulls Real Estate's divisions in Mumbai, the company told the Bombay Stock Exchange in February. The units are developing a combined 3.4 million square feet of space for offices, shops and housing in central Mumbai, estimated by Knight Frank to be worth $3.2 billion, the company said.

The trust will give investors 90 percent of distributable income every six months, beginning Sept. 30.

REITs raise money from equity investors to buy property including shopping malls and business parks. They are usually required to pay most of their profit as dividends. Investors buy shares in REITs to dilute the risk of putting money directly into a single real estate project.

Merrill Lynch & Co. and Deutsche Bank AG are arranging the share sale, according to a prospectus filed by Indiabulls Properties to the Monetary Authority of Singapore.

Presentations to institutional investors start today, with pricing scheduled for next week, according to the e-mail.

Indiabulls Real Estate, which has a land bank of 10,000 acres (4,047 hectares), is developing office space in Mumbai and 15 shopping malls in eight towns including Ahmedabad, Agra and Hyderabad. It is also developing special economic zones, according to the company's Web site.

To contact the reporters on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net; Darren Boey in Hong Kong at dboey@bloomberg.net.