Brookfield India REIT IPO is ready to get launched for subscription on 03 February, 2021, Brookfield India Real Estate Trust IPO is the third REIT IPO after Mindspace Business Parks REIT in 2020 and Embassy Office Parks REIT in 2019. Brookfield India REIT IPO is the 5th IPO getting opened for subscription in 2021 after IRFC IPO, Indigo Paints IPO, HFFC IPO & Stovekraft IPO.
The Brookfield REIT is India’s only institutionally managed public commercial real estate vehicle. It is sponsored by an affiliate of Brookfield Asset Management (BAM), who is also one of the world’s largest alternative asset managers with approximately $575 billion in assets under management, as of September 30, 2020.
Brookfield REIT goal is to be the leading owner of high quality income producing commercial real estate assets in key gateway Indian markets, which have significant barriers to entry.
Brookfield India Real Estate Trust (REIT)‘s ₹ 3,800 crore initial public offering (IPO) will open for bidding on February 3. The public issue will close on February 5.
The Canadian asset manager Brookfield Asset Management backed company has fixed the price band of the IPO at ₹ 274-275 per unit. The shares are likely to be listed on the BSE and NSE on February 17, 2021.
Investors can bid for a minimum 200 units and in multiples of 200 units thereafter, which means a minimum application size of ₹ 55,000 at the higher end of the price band. The company will use the funds to repay debts.
Brookfield REIT informed the exchanges on Feb,2, 2021 that it has raised Rs 1,709 crore from 39 anchor investors. Nearly 75% of the anchor book was apportioned to domestic institutional investors, HDFC Mutual Fund and Kotak Mutual Fund together have more than 25% share.
Domestic insurers, including SBI Life Insurance, TATA AIG, HDFC Life Insurance, Aditya Birla Sun Life, Max Life, Star Health, Canara HSBC OBC Life, Reliance General accounted for 39% of the allotment. Whereas, the FII participation came from Schroders (10.5% of anchor book), Morgan Stanley Asia and Segantii Mauritius (1.5% each).
Ambit, Axis Capital, IIFL Securities, JM Financial, JP Morgan India, Kotak Mahindra Capital and SBI Capital Markets are the book running lead managers to the issue, while Link Intime India is the registrar for the Brookfield REIT IPO.
In this post we will not only know about all the details related to Brookfield India REIT IPO, such as Issue size, Issue type, Bid lot, price range, issue date, Cut-off timings but also about the financials step by step.
So, Let us first start by knowing about Brookfield India REIT, but even before that Let us now in brief about what exactly is REIT?
What Is REIT’s?
REIT is an acronym for Real Estate Investment Trust. REIT is basically a company which develops and own ‘income producing’ real estate properties. A REIT is an investment vehicle that allows investors to invest in real estate and hold properties, and then lease it out to earn rental income.
In India, REIT is only allowed for investing and holding commercial properties. In simple terms, REIT works like a mutual fund by pooling investments from domestic and international investors and then investing in income generating properties, mostly commercial assets.
The minimum subscription has been reduced to 50,000 from 2 lakhs, helping small investors to participate. For REIT’s there is a mandate that out of all Net Profit (PAT), at least 90% should be paid out as dividends to its shareholders. It means, not more than 10% of PAT can be kept as retained earnings by REIT’s in India.
In India REITs are governed by SEBI (Real Estate Investment Trusts) Regulations, 2014 which primarily lay down the framework in line with the global REIT’s standards.
Below are some of the condition to be met before qualifying it as REIT in India:
- Invest at least 75% of total assets in real estate
- Derive at least 75% of gross income from rents, interest on mortgages that finance real property, or real estate sales
- Pay a minimum of 90% of taxable income in the form of shareholder dividends each year
- Be an entity that’s taxable as a corporation
- Be managed by a board of directors or trustees
- Have at least 100 shareholders after its first year of existence
- Have no more than 50% of its shares held by five or fewer individuals
- Minimum 80% of total value of assets to be comprising of completed and income generating properties
- Net Debt to not exceed 49% of total asset value
- Minimum 90% of distributable cash flows to be distributed
REITs are typically listed on stock exchanges through an Initial Public Offering (IPO). Once listed, they serve as permanent capital vehicles to raise debt and equity in the capital markets to acquire new assets to grow.
About Brookfield India Real Estate Trust:
Brookfield India Real Estate Trust is sponsored by an affiliate of Brookfield Asset Management, one of the world’s largest alternative asset managers and investors, with approximately US$575 billion of assets under management, as of September 30, 2020, across real estate, infrastructure, renewable power, private equity and credit strategies.
Brookfield Asset Management has a global presence of over 150,000 operating employees across more than 30 countries, as of September 30, 2020. Listed on the NYSE and TSX, it has a market capitalization of over US$63 billion as of September 30, 2020.
As a real estate service company, it provides management services, including facility management and project delivery to the real estate assets held by the Brookfield Group across India. It has demonstrated a robust track record in delivering value. Since April 1, 2015, it has leased 4.3 M sf and delivered 3.6 M sf of completed area within the Initial Portfolio.
It owns and operates 14 million sq. ft. of real estate space, with campus-format office parks located at Mumbai, Noida, Gurugram and Kolkata. The properties in the initial portfolio comprise Kensington (Mumbai), Candor Techspace G2 (Gurugram), Candor Techspace N1(Noida) and Candor Techspace K1(Kolkata).
The trust has also agreed to purchase Candor Techspace G1 (Gurugram) and Candor Techspace N2 (Noida), referred as identified assets. The trust will also have a right of first offer on the acquisition of Powai Business District, Equinox Business Park, Units in Godrej BKC and Waterstones, which are collectively referred to as the “ROFO properties”.
The company, according to its offer document, will use the net proceeds from the issue towards scheduled re-payments and general purposes “The indebtedness will be lower by 18.5% of initial market value.
Let us now move on to knowing the most important factor that is, the financials of Brookfield India Real Estate Trust (REIT).
Financials Of Brookfield India Real Estate Trust (REIT):
The Brookfield REIT’s total income increased by 5.5% to Rs 9,813.95 million for the financial year 2020 from Rs 9,298.30 million for the financial year 2019. It had a profit for the year of Rs 151.22 million for the financial year 2020 as compared to a loss for the year of Rs 157.45 million for the financial year 2019.
It aims to continuously improve its properties to provide premium infrastructure and facilities for its tenants, including renovating and modernizing building lobbies, corridors, elevators, lighting, energy-efficient retrofitting and upgrading base building systems. It also intends to acquire high quality assets that complement and enhance its Initial Portfolio.
Despite the strong operating margin, Brookfield India RIET’s financials have not been very encouraging. Its net profit stood merely at Rs 15 crore in FY20, while the company incurred Rs 74 crore net loss in 1HFY21.
The initial portfolio’s net operating income is projected to grow 25% (net of one-time adjustment) to Rs 818 crore, over the projections period ending in financial year 2023. The projections include Candor India Office Parks.
Their Initial Portfolio 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.
In terms of their current income there is tremendous upside in the same store growth of the net operating income. That’s a result of two factors; contractual escalations as well as mark to market or rentals as 10-15(%) churn in this portfolio going in the future. The distribution of yield will be in the range of 7.95-7.98%.
According to the offer document, it didn’t face any significant disruptions in operations because of Covid-19 during FY20 and the six months ended Sept. 30, 2020. “They collected 98%, 98%, 99%, 99%, 97% and 98% of the gross contracted rentals for the months of April, May, June, July, August and September 2020, respectively.
The company expects NDCF (Net Distributable Cash Flows ) to the tune of Rs 660 crore and Rs 700 crore in FY22E and FY23E, respectively which offer yield of 8%.
Brookfield India Real Estate Trust (REIT) Peers Comparison:
Brookfield India REIT IPO Details:
Objects of the Issue:
The net proceeds from the Brookfield India Real Estate Trust will be utilized for the following purposes:
- To make partial or full payment of existing indebtedness of the Asset SPVs.
- To meet general corporate purposes.
Brookfield is offering 1.4 crore square feet of its portfolio in the REIT and proposing to reduce its shareholding in the same to 54 per cent post-issue.
Frequently Asked Question (FAQ):
1.What Is The Symbol For Brookfield India REIT?
Ans: The Symbol for Brookfield India REIT is BIRET
2.When Brookfield India REIT IPO Coming?
Ans: The Issue Period for Brookfield India REIT IPO is 03-Feb-2021 to 5-Feb-2021.
3. Post Modification Period For Brookfield India REIT IPO?
Ans: Post issue Modification Period 08-Feb-2021 (between 10.00 a.m. to 1.00 p.m. only)
4.What Is The Payment Mode For Brookfield India REIT IPO?
Ans: Payment Mode is ASBA Only
Please note: You will not be able to invest in Brookfield India REIT IPO via UPI. You can invest in the IPO via the ASBA facility– available via the net banking interface of your bank account. Almost all banks offer this facility.
5. What Is The Issue Type For Brookfield India REIT IPO?
Ans: The Issue Type is 100% Book Building.
6.What Is The Price Band For Brookfield India REIT IPO?
Ans: The Price (Band) Range for Brookfield India REIT IPO is Rs.274 to Rs. 275 per units.
7. What Is The Lot Size For Brookfield India REIT IPO?
Ans: The Bid Lot i.e. Minimum Order Quantity (lot size) for Brookfield India REIT IPO is of 200 Equity Shares and in multiples thereof 200 Equity Shares.
8. Who Are The Book Running Lead Managers For Brookfield India REIT IPO?
Ans: The Book Running Lead Managers are, Ambit Private Limited, Axis Capital Limited, IIFL Securities Limited, JM Financial Limited, J.P. Morgan India Private Limited, Kotak Mahindra Capital Company Limited, SBI Capital Markets Limited
9. What Is The IPO Market Timings For Brookfield India REIT IPO?
Ans: The IPO Market Timings is 10.00 a.m. to 5.00 p.m.
Apart from above points:
Name of the Registrar for Brookfield India REIT IPO is Link Intime India Private Limited
Address of the Registrar is C-101, 1st Floor, 247 Park Lal Bhadur Shastri Marg Vikhroli (West), Mumbai 400 083 Maharashtra, India
Contact person name number and Email id is: Shanti Gopalkrishnan, +91 22 4918 6200, brookfield.reit@linkintime.co.in
Where To Check Brookfield India REIT IPO Application And Allotment Status?
As an investor or trader generally we are curious and anxious to know the results of the application as soon as possible. To ease the anxiety, both Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) have come up with dedicated pages and links which investors can use.
NSE
The NSE has an IPO bid verification module. It can be used to verify the IPO application details uploaded on the exchange bidding system by your member/bank. The data of the bid details uploaded by the member/bank would be available on T+1 day (where T would be date receipt of bid on NSE platform).
In addition, the data would be available until six days after the issue closure date. This gives the investor enough time to verify the data and instruct the member/bank to make any changes, if required.
Exchange will also provide allotment information as provided by the registrar to the issue.
An investor can avail this facility by registering using his/her PAN details. After registration, the investor will receive an email notification from NSE on the registered email address. That email will provide the login details.
The following link can be used for the same:
https://www.nseindia.com/products/dynaContent/equities/ipos/ipo_login.jsp
BSE
The BSE has also come up with a similar platform.
This unique facility allows investors to verify the status of their application submitted to a Trading Member or a SCSB (Self-Certified Schedule Banks).
The investor can check his application status/information on the website until one week after issue close.
The following link can be used by investors:
https://www.bseindia.com/investors/appli_check.aspx
Important Things To Keep In Mind Before Applying For IPO’s:
- Try to fill for the same IPO online from different DP ID i.e. if in your family have more than 1 account you can possibly get the allocation done in case of over subscription.
- You should have a good knowledge of the sector and the company you are planning to invest.
- Analysis of the company’s balance sheet is very crucial. A clear understanding of the company’s future projects and vision is very necessary to know whether it will have a sustainable future.
- Investment decision has to be taken carefully and not in a hurry.
- Read as much as you can about the company, its objectives for launching the IPO, its past history in business and its futures prospectus.
- Don’t go for hype in the news, your analysis should be based on facts rather than gossips and rumors.
- Many IPOs are oversubscribed. What this means is that the demand for shares is much higher than the shares available for sale. In such a situation, it is no surprise that many investors fail to get any shares allotted to them. This is why it is advisable to apply for IPO shares on the last day of bidding. This way, one can have a good estimate on how large the subscription will be. Also, in that case, one should bid for just one lot and not unnecessarily lock up their capital.
Conclusion:
The real estate sector is one of the important sectors of the Indian economy because of its multiplier effect. An impact on this sector has a direct bearing on economic growth of the country. The bulk of demand for Grade-A1 office stock in India is from multinational corporates based out of the United States and the European Union.
The demand for quality office spaces has also led to rental growths growing at a CAGR of approximately 4.2% over the last 5 years. The net absorption of office spaces in Mumbai and National Capital Region, which includes Gurugram and Noida and hereinafter referred to as NCR and has been in line with major global office markets led by low per capital supply, growth of technology services sector, increasing traction from international tenants and attractive rentals.
Cons of Brookfield India RIET’s:
- Operate in competitive markets
- Business may be adversely affected by illiquidity of real estate investments
- Significant portion of revenue derived from limited number of tenants, sectors
- Profitability depends on performance of commercial real estate market in India
Pros of Brookfield India REIT’s:
- Experienced, cycle tested senior management team
- Placemaking capabilities
- Difficult to replicate, dominant and strategically located properties
- Global sponsorship with local expertise
Performance-wise, REITs offer attractive risk-adjusted returns and stable cash flow. Also, a real estate presence can be good for a portfolio because it provides diversification and dividend based income and the dividends are often higher than you can achieve with other investments.
REITs don’t offer much in terms of capital appreciation. As part of their structure, they must pay 90% of income back to investors. So, only 10% of taxable income can be reinvested back into the REIT to buy new holdings.
Therefore, it is always advisable to go through Brookfield India Real Estate Trust – DRHP to know in detail about the company.
The only thing which should be bothering you is the research you did before applying for the IPO. Investing in IPO is risky as well as profitable. Having said that you also need to keep in mind important things mentioned above before applying to IPO’s as the risk is always involved.
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Note: Please do your own research and make investment. Moneycontain will not be responsible for any of your losses at all. The point made is for educational purpose only and intended to give information. All investments are subject to risks, which should be considered prior to making any investments. The above details are compiled from information available on public platforms. These are not buy or sell recommendations.
