Lodha plans REIT for monetizing digital infrastructure platform

Lodha plans REIT for monetizing digital infrastructure platform

Macrotech Developers Ltd, known for its housing projects under the brand ‘Lodha,’ is venturing into the realm of real estate investment trusts (REITs) for its digital infrastructure assets. The company has secured a substantial $1 billion platform for this purpose, thanks to funding from Bain Capital and Ivanhoe Cambridge. The digital infrastructure platform, which was announced in May 2022, aims to invest the allocated funds in creating 30 million square feet of operational assets. These assets will encompass logistics and industrial parks, as well as in-city fulfillment centers.

Within this ambitious initiative, the platform has already made two investments. The first is a sprawling 110-acre logistics and industrial park located in Palava City. The second investment is an in-city warehouse situated in Kurla, covering a total area of approximately 5.7 million square feet. Macrotech Developers anticipates significant growth for the platform in the current fiscal year and the years to come. Once the platform reaches a mature stage with substantial scale, the company plans to introduce a REIT as an exit strategy to monetize the platform.

Additionally, the digital infrastructure platform is actively seeking acquisitions across various regions in India. This includes the acquisition of land and ongoing development projects.

Macrotech Developers’ existing portfolio already boasts a considerable annuity income from commercial assets. These assets comprise offices, a shopping mall, logistics parks, and warehouses.

The company has set ambitious targets for its annuity income, aiming to generate Rs 500 crore annually by the fiscal year 2026 and eventually reaching Rs 1,500 crore by the end of the decade. A significant portion of this income will be attributed to the digital infrastructure platform. To achieve these goals, Macrotech Developers is in discussions with both global and local retail brands to establish their fulfillment centers within the designated areas. In the fiscal year 2023, the company’s annuity income from the office and mall portfolio amounted to around Rs 260 crore.

Moreover, Macrotech Developers is actively expanding its existing commercial portfolio, which includes offices and retail assets. As part of this strategy, the company has decided against selling a 6.5 lakh square feet commercial asset package, consisting of a mall and an office complex. Instead, these assets will serve as drivers for future growth while simultaneously strengthening the company’s balance sheet.

Also Read: Tata Group to Establish Rs 13,000 Cr Lithium-Ion Cell Plant in Gujarat

Inspired by the favorable performance of three office-based REITs and one retail-focused REIT, other real estate developers are also considering launching their own REITs. This trend is particularly evident in cases where stable rent-yielding assets are present.

In conclusion, Macrotech Developers Ltd is strategically positioning itself in the digital infrastructure sector through the establishment of a significant platform funded by leading investors. This move aligns with the company’s vision to generate substantial annuity income and explore opportunities for growth in the real estate market.

About Lodha Group:

Lodha or Macrotech Developers is a Mumbai-based Indian multinational real estate company. Established in 1980 by Mangal Prabhat Lodha, it has successfully built residential and commercial properties in Mumbai, Thane, Hyderabad, Pune, and London.

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