The initial public offering of Brookfield India Real Estate Trust, sponsored by an affiliate of Brookfield Asset Management, has been subscribed 14.62 percent so far on the first day of bidding, February 3.
The public offer has received bids for 1.15 crore units against the IPO size of over 7.62 crore units, the subscription data available on the exchanges showed.
The reserved portion of other investors, including corporates and individuals, witnessed 30.11 percent subscription, while the portion set aside for institutional investors has subscribed 3 percent.
The India's only institutionally managed public commercial real estate vehicle is aimed to raise Rs 3,800 crore through its public issue. Of which, it already garnered Rs 1,710 crore from anchor investors on February 2, a day ahead of issue opening.
Brookfield India Real Estate Trust IPO opens today: 10 things to know about the public issue
The company will utilise issue proceeds for repayment of the existing indebtedness of asset SPVs and general corporate purposes. The price band for the public issue has been fixed at Rs 274-275 per share.
The goal of the entity 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. Its Initial Portfolio comprises 14.0 million square feet (msf) (10.3 msf completed area, 0.1 msf of under construction area and 3.7 msf of future development potential).
Brookfield India Real Estate Trust IPO opens today: Should you subscribe?
The company has rights to acquire a further 8.3 msf and rights of first offer on an additional 6.7 msf, both currently owned by members of the Brookfield Group. Its properties are located in key market of Mumbai, Gurugram, Noida and Kolkata.
Initial Portfolio's completed area has same store commitment occupancy of 92 percent with 75 percent of Gross Contractual Rental agreements with multinational corporations. 7.1-year Weighted Average Lease Expiry (WALE) provides stability to the cash flows and is well positioned to achieve further organic growth through combination of contractual lease escalations, 36 percent mark-to-market headroom to in-place rents, lease-up of vacant space and near-term completion of Under Construction Area to meet tenants' expansion needs.
"We expect Brookfield to register a stable cash flow with current portfolio and headroom to further expand the space to lease out. Brookfield REIT has exclusive rights at their discretion to acquire the identified assets," said KR Choksey which recommended subscribe rating for the IPO.
At higher end of unit price of Rs 275, "it is available at steep discount of 11.6 percent to its NAV per unit as of September 2020 which stands at Rs 311 NAV per unit. As of December 14, 2020 its peers, Embassy office Park REIT and Mindspace Business Park REIT were trading at discount of 5.3 percent and 3.0 percent respectively of its NAV per unit. Brookfield at 11.6 percent discount of its NAV/units provides a comfort to its valuation," the brokerage reasoned.