Brookfield REIT To Sell Shares At Rs 274-275 Apiece In IPO

Brookfield India Real Estate Trust will sell shares at Rs 274-275 apiece at its three-day initial public offering, India’s third such float, which opens on Wednesday.

The maiden offer by the trust, backed by Canadian asset manager Brookfield Asset Management Inc., is a fresh issue of units aggregating up to Rs 3,800 crore.

The REIT will use the proceeds to pare its debt by Rs 3,750 crore. “The indebtedness will be lower by 18.5% of initial market value,” Ankur Gupta, managing partner, head of India-real estate at Brookfield Asset Management, told BloombergQuint. “The cost of debt is at 7.1%.”

Morgan Stanley India Co. Pvt., DSP Merrill Lynch Ltd., Citigroup Global Markets India Pvt. and HSBC Securities and Capital Markets (India) Pvt. are the global coordinators and book running lead managers to the issue.

This is the third IPO by a real estate investment trust, and comes at a time participation of retail investors in equity markets in India and around the world has increased following the pandemic-induced lockdowns. The domestic benchmarks, too, are scaling new peaks. Previously, Embassy Office Parks REIT went public in 2019 and Mindspace Business Parks REIT listed in August last year.

Brookfield Asset Management has nearly $17-billion portfolio across real estate, infrastructure, renewable power and private equity in India. It owns and operates 42 million sq. ft. of real estate space, besides seven toll roads totaling more than 600 km of roadway, solar and wind assets, a construction business, and real estate management services, according to its website.

Of this, the REIT’s initial portfolio, the prospectus filed with the market regulator said, comprises four large campus-format office parks in Mumbai, Gurugram, Noida and Kolkata, totaling 14 million sq. ft — 10.3 msf of completed area, 0.1 msf of under construction area and 3.7 msf of future development potential.

“We believe the assets chosen are [of] the highest quality, most stable assets to be part of the initial portfolio,” Gupta said. The initial portfolio yield at the issue price will be 7.95-7.98%, he said, adding when new assets will be ready to acquire, it will help in accretion in yield. The REIT has identified 8.3 million sq. ft. assets and has right of first offer over additional 6.7 million sq. ft.

In the near term, the company will use construction debt to complete under-construction and future development of assets under the initial portfolio.

India’s commercial real estate has been grappling with the impact of pandemic and work from home model adopted by most companies to lower costs. According to a report by Knight Frank India, total office transactions in the second half of 2020 dropped 33% over a year earlier to 2.06 million sq metres (22.2 million sq ft). The top seven Indian cities, according to Anarock Research, have close to 550 million sq ft of Grade A office supply, of which 310-320 million sq ft is REIT-able.

Watch the full interview here: