The initial public offering (IPO) of Nexus Select Trust REIT had garnered bids for 101 crore units against an offer size of 18.52 crore shares, with the issue subscribed 5.45 times on the afternoon of May 11, the final day of bidding.
High networth individuals (HNIs) bought 6.22 times the allotted quota, while the portion set aside for qualified institutional buyers (QIBs) was subscribed 4.82 times.
The India's leading real estate investment trust (REIT) aims to raise Rs 3,200 crore via the offer that opened on May 9. The offer comprises a fresh issuance of shares worth Rs 1,400 crore and an offer for sale (OFS) of shares worth Rs 1,800 crore.
The REIT mopped up Rs 1,440 crore through its anchor book on May 8.
The company will utilise fresh issue proceeds for repaying loans of the asset special purpose vehicles and the investment entity, and acquisition of stake and redemption of debt securities in certain asset SPVs, besides general corporate purposes.
The price band for the offer is Rs 95-100 a share.
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Nexus Select Trust has a portfolio of 17 Grade A urban consumption centres with a total leasable area of 9.2 million square feet (msf), two complementary hotel assets (354 keys) and three office assets (1.3 msf) as of December 2022, the company said.
Its portfolio has a tenant base of 1,044 domestic and international brands with 2,893 stores as of December 2022.
It's ‘subscribe’ from brokerages
Most of brokerage houses have a “subscribe” rating on the issue considering the attractive valuations, its best-in-class assets and no listed real estate investment trusts in the retail sector in India.
"The IPO is priced conservatively at a 22 percent discount to the net asset value (NAV) of the units," Marwadi Financial Services said.
Post-IPO, the equity value of the trust will be Rs 15,150 crore and NAV per unit in relation to the offer price shall be 0.78 at the upper price band.
Based on the pricing, "investors would get ongoing return of 8.3 percent pre-tax and 7.1 percent post-tax in terms of the distributions made by the REIT," the brokerage house said.
It has assigned “subscribe” rating to the IPO, saying Nexus has India’s largest platform of best-in-class assets with a presence in 14 of key consumption cities and strategically located in prime in-fill locations with high barriers to entry.
"There are no listed real estate investment trusts in the retail sector in India comparable to that of this business," Marwadi said.
A majority of Nexus' portfolio assets are market leaders in their respective submarkets and serve as shopping, entertainment, and social destinations for their respective catchments, it said.
Nexus REIT enjoyed a 96.2 percent average committed occupancy across its portfolio as of December 2022.
BP Wealth, too, said at the upper price band of Rs 100, the issue looks attractive. It, too, has a “subscribe” call for the long term.
Moreover, "considering the three listed office REITs, Nexus Select Trust offers a differentiated exposure to investors due to its retail assets. The company will also declare and distribute at least 90 percent of the net distributable cash flows of the Nexus Select Trust as distributions to the unitholders," BP Wealth said.
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