Canadian alternative asset manager, Brookfield is looking to raise Rs 3,800 through a public issue of its Real Estate Investment Trust (REIT) next week. Upon successful listing on Dalal Street, Brookfield REIT will be the third real estate investment trust to list on the bourses after Embassy Office Parks REIT in 2019 and Mindspace Business Park REIT in 2020. However, what makes Brookfield RETI different from the other two is that it is the only institutionally managed public commercial real estate vehicle in India.
About the issue
Brookfield REIT IPO will look to raise Rs 3,800 through a fresh issue at a price band of Rs 274-275 per unit. Investors can bid for the issue in a lot size of 200 units and multiples thereafter. Implying that the minimum cost of bidding for the issue would range between Rs 54,800-55,000. The IPO will open on February 3, just two days after the Union Budget 2021 and close on February 5.
Brookfield REIT assets
The initial portfolio of Brookfield REIT totals 14.0 msf, comprising 10.3 msf of Completed Area, 0.1 msf of Under Construction Area and 3.7 msf of Future Development Potential. Through the issue, Brookfield REIT is looking to partially or fully prepay or repay existing indebtedness of the Asset SPV and fulfil other general corporate purposes.
Brookfield REIT owns 4 large campus-format office parks, located in some of India’s key gateway markets – Mumbai, Gurugram, Noida, and Kolkata. “Their Initial Portfolio’s Completed Area has a Same Store Committed Occupancy of 92% and leased to marquee tenants with 75% of Gross Contracted Rentals contracted with multi-national corporations such as Barclays, Bank of America Continuum, RBS, Accenture, Tata Consultancy Services and Cognizant,” Axis Securities wrote in a note.
After the coronavirus aided lockdown, now Brookfield is witnessing a revival in demand across its portfolio. In addition to having re-leased 0.5 msf of leases that expired during the 6 months ended September 30, 2020, they have received interest and are engaged in discussions with respect to 1.6 msf. Axis Securities noted that during the months of October, November and December 2020, the REIT collected 99%, 98% and 96% of their Gross Contracted Rentals, respectively. Kensington in Mumbai, Candor Techspace G2 in Gurugram, Candor Techspace N1 in Noida, Candor Techspace K1 in Kolkata, and Operational Services Provider in Mumbai are some of the properties under the REIT.
Healthy dividend payout
Both Embassy Office Parks REIT and Mindspace Business Park REIT are currently trading at a premium to their issue price. REITs enjoy stable rental income and strong income payout which results in high dividend yields for unitholders.
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