Brookfield India Real Estate Investment Trust’s (REIT) initial public providing (IPO) will open for subscription tomorrow. Brookfield REIT will be third genuine estate investment trust to be listed on the bourses in India immediately after the IPO, but the only one hundred% institutionally managed public industrial genuine estate car. The problem opens for subscription tomorrow and will close on Friday. So far, domestic markets have observed Embassy Office Parks REIT in 2019 and Mindspace Business Parks REIT in 2020, each trading at a premium more than their problem cost.
About the problem
Investors can bid for Brookfield India REIT at an problem cost of Rs 274 to Rs 275 per unit, translating to Rs 3,800 crore problem size. Bids for the REIT can be placed for 200 units or multiples thereafter, with 13.81 crore units on present. This requires the minimum investment permitted in the Brookfield REIT IPO to Rs 55,000 at the upper finish of the cost band. Currently, BPG Holdings Grou, an entity of Brookfield, holds a 99% stake in the REIT. Through the public problem, the genuine estate trust aims to repay its current debt.
REIT portfolio
Brookfield India REIT owns an Initial Portfolio of 4 substantial campus-format workplace parks, situated in Mumbai, Gurugram, Noida and Kolkata. Their Initial Portfolio totals 14. msf, comprising 10.3 msf of Completed Area, .1 msf of Under Construction Area and 3.7 msf of Future Development Potential. “Despite the strong operating margin, Brookfield India RIET’s financials have not been encouraging. Its net profit stood merely at Rs 15 crore in FY20, while the company incurred Rs 74 crore net loss in 1HFY21,” analysts at Reliance Securities stated in a note.
Properties of Brookfield India REIT have 96% occupancy, larger than peers and 6.8 years of weighted typical lease expiry, which is just about equal to peers. Brookfield India counts multi-national corporations such as Barclays, Bank of America Continuum, RBS, Accenture, Tata Consultancy Services and Cognizant as its clientele.
Dividend play?
REITs act an desirable dividend play as not significantly less than 90% of the Net Distributable Cash Flows (“NDCF”) of its Asset SPVs are expected to be distributed to Brookfield REIT. “At least 90% of the NDCFs of Brookfield REIT (“REIT Distributions”) shall be declared and paid after just about every quarter of a Financial Year by their Manager. The very first distribution shall be produced upon completion of the very first complete quarter immediately after the listing of its Units on the Stock Exchanges,” Axis Securities stated. Further, the earnings distributed by Brookfield REIT shall not be integrated in the total earnings of the unit-holders.
Should you subscribe or not
Analysts at Reliance Securities have a ‘Subscribe with long term perspective’ view on the IPO. “the company expects NDCF to the tune of Rs 660 crore and Rs 700 crore in FY22E and FY23E, respectively which offer yield of ~8%. Hence, we recommend SUBSCRIBE from long-term perspective,” they added.