Brookfield India REIT sees tepid listing, debuts at Rs 279 per share

Shares of Brookfield India’s Real Estate Investment Trust (REIT) listed at Rs 279 on the NSE on Tuesday, a premium of 1.45 per cent over its issue price of Rs 275 per share. Meanwhile, on the BSE, the scrip listed flat at Rs 275.05 per share.

The initial public offer by Brookfield REIT got subscribed 8 times on the final day of subscription and received bids for 60,59,44,400 units against 7,62,78,200 units on offer.

The category meant for institutional investors was subscribed 4.80 times and those for other investors 11.78 times.

"The net proceeds from the public issue will be utilised for partial or full pre-payment or scheduled repayment of the existing debt of asset special purpose vehicles," the firm said in its red-herring prospectus.

Brookfield REIT is the third such trust to be listed in the country. The first one Embassy Office Parks REIT, backed by Blackstone and Embassy group, got listed in April 2019 after raising Rs 4,750 crore. Mindspace Business Parks REIT, owned by K Raheja and Blackstone, was listed in August last year and had raised Rs 4,500 crore.

Analysts held mixed views on the IPO ranging from Neutral to Subscribe with long term view.

Though the REIT has incurred losses in FY20 and has not paid out any dividends, they expect to pay a yield of 7.5 per cent in FY23, which we believe is aggressive and may be difficult to achieve, said Yash Gupta, research analyst at Angel Broking.

"Post the IPO there will also be a debt reduction of Rs 3,575 crore for the company which will bring down the overall debt. However, due to the current uncertainties around Covid-19 and proliferation of work from home, we expect that demand for commercial real estate to be muted. Given the uncertainties, weak financials and high debt on the book we would recommend a 'Neutral' rating on the issue," Gupta said.

Meanwhile, analysts at Choice Broking and Reliance Securities had recommended subscribing to the issue with a long-term view.

"Since technology companies account for around 50% of the leased area of the existing portfolio and considering their positive outlook, we don’t think there will be any concerns on the future tenancy. With interest rate at lower levels in the economy, the projected yield from this REIT seems to be attractive. Thus considering the above observations, we assign a 'Subscribe for Long Term' rating for the issue." said analysts at Choice Broking in a note dated February 3, 2021.