Mindspace Business Parks REIT lists at 11% premium over issue price

The IPO of Mindspace Business Parks REIT was subscribed 13 times during July 27-29

Shares of Mindspace Business Parks REIT on Friday listed on the BSE at Rs 304, a 10.54 per cent premium against its issue price of Rs 275 per share.

Till 10:27 AM, the stock had hit an intra-day high of Rs 208.90 and an intra-day low of Rs 299 per share on the exchange. A combined1.43 crore shares have changed hands the NSE and the BSE, so far.

The initial public offer (IPO) of Mindspace Business Parks REIT was subscribed 13 times during July 27-29, 2020. The 67.7-million unit offering had garnered bids for 878 million units, generating demand worth more than Rs 24,000 crore. The IPO comprised of fresh fund raise of Rs 1,000 crore and an offer for sale of Rs 3,500 crore.

Mindspace REIT is the second REIT to hit the domestic market after Embassy Office Parks REIT. The REIT, promoted by K Raheja Corp Group (KRC Group), has a completed commercial portfolio of 23 million square feet across key office markets of Hyderabad, Mumbai, Pune, and Chennai. The company generated net operating income (NOI) of Rs 1,225 crore for FY20. It has grown its NOI at 11-14 per cent over the past two financial years. 

For FY21, it has indicated a net distributable cash flow (NDCF) of Rs 574 crore for the second half of FY21. NDCF is the amount available to the REIT for distribution in the form of dividends to unitholders; the REIT has to distribute at least 90 per cent of NDCF on a semi-annual basis. 

For FY21, on an annualised basis, the yield in the Rs 274-275 price band works out to 7 per cent. The REIT estimates yields to be at 7.5 per cent in FY22 and 8 per cent in FY23. Returns from rental assets are a function of increasing NOI. Over the FY20-23 period, the company expects this metric to increase 17 per cent annually to just under Rs 2,000 crore, from the FY20 level of Rs 1,225 crore. READ MORE