Brookfield REIT IPO Subscribed 7.9 Times
The Rs 3,800-crore public issue of Brookfield India Real Estate Trust is subscribed 7.94 times on the final day of bidding, February 5. It is the third REIT IPO after Embassy Office Parks REIT in 2019 and Mindspace Business Parks REIT in 2020.
The public issue has received bids for 60.5 crore units against the offer size of over 7.62 crore units, the subscription data available on the exchanges showed. The portion set aside for institutional investors witnessed subscription of 4.8 times, and that of other investors 11.7 times.
“Brookfield REITs offering is a great indicator of the strong future that commercial real estate has in India. After the successful listing of Embassy and Mindspace REITs, this rides high on the long-term investor confidence,” Tushar Rane Executive Director – Capital Markets (Core Assets) at Knight Frank India said.
Brookfield REIT, which is sponsored by an affiliate of Brookfield Asset Management (one of the world’s largest alternative asset managers with approximately $575 billion in assets under management as of September 2020), aims to raise Rs 3,800 crore via public issue. Of which it already mopped up Rs 1,710 crore through anchor book on February 2.
The company will utilize these issue proceeds for repayment of debts availed by its Asset SPVs.
The initial portfolio is proposed to be acquired and held by the Brookfield REIT through their Asset SPVs. Brookfield REIT owns an initial portfolio of 4 large campus – format office parks, which are ‘business critical’, located in Mumbai, Gurugram, Noida and Kolkata.
Its initial portfolio totals 14.0 million square feet (msf), comprising 10.3 msf of completed area, 0.1 msf of under-construction area and 3.7 msf of future development potential. The initial portfolio’s completed area has a same store committed occupancy of 92 percent (and a 87 percent committed occupancy, which includes the recently completed 0.5 msf at Candor Techspace N1) and leased to marquee tenants with 75 percent of gross contracted rentals contracted with multi-national corporations such as Barclays, Bank of America Continuum, RBS, Accenture, Tata Consultancy Services and Cognizant.
“At Rs 275 per unit, Brookfield REIT is expected to give pre-tax yield of 7.95 percent in FY22 and 8.43 percent in FY23. However, the payout of the first year will have 85 percent interest component (taxable in hands of investor) and 15 percent dividend (tax free). The interest component will be reduced over a time as the dividend component increases,” Sharekhan said.