10 things you should know about India’s first retail REIT

Nexus Select Trust REIT’s Rs 3,200 crore initial public offer opened for subscription on May 9. This is India's first pure-play retail real estate investment trust (REIT)

1  The offer: Nexus Select Trust REIT’s Rs 3,200 crore initial public offer opened for subscription on May 9. This is India's first pure-play retail real estate investment trust (REIT). The offer includes the fresh issue of units worth Rs 1,400 crore.

2 The Price Band: Nexus Select Trust, which is backed by Blackstone, the world’s largest alternative asset manager, has set the price band of its offering at Rs 95-100 per share for the issue scheduled to close on May 11.

3 Amount Raised: It raised Rs 1,440 crore from 20 anchor investors on May 8. It finalised the allocation of 143.99 million units to anchor investors at Rs 100 per unit, the company said in filing to the exchanges.

4 Anchor Investors: The anchor investors included Morgan Stanley Asia, Segantii India Mauritius, HDFC Trustee, HDFC Life Insurance, Prusik Umbrella Ucits Fund, IIFL Income Opportunities Fund, SBI Life Insurance, Star Health and Allied Insurance, ICICI Prudential, NPS Trust, SBI General Life Insurance, Ghisallo Master Fund, and Tata Investment Corporation.

5 Expansion Plans: Nexus Select Trust sees the platform as an opportunity to double its size in four to five years to 20 million square feet from 9.8 million square feet in potentially 30 metros and tier-2 cities.

6 Portfolio: It had a portfolio of 17 operational shopping centres valued at about Rs 23,000 crore, two complementary hotel assets (354 rooms) and three office assets (1.3 million square feet) as of June 30, 2022. The assets are located in 14 cities – New Delhi, Mumbai, Chennai, Pune, Bengaluru, Hyderabad, Ahmedabad, Chandigarh, Amritsar, Bhubaneswar, Udaipur, Mysuru, Mangalore and Indore.

7 Bullish on Retail Consumption: Nexus acquired the 17 shopping malls over the past seven years and will expand its portfolio through acquisitions as it remains bullish about retail consumption. Delhi’s Select City Walk, which houses the country's second Apple store, is one of the malls owned by Nexus Select Trust.

8 First Retail REIT: The trust filed the draft red herring prospectus of the offering with the Securities and Exchange Board of India in November last year. Currently, there are three listed REITs, all backed by office assets.

9 Total Retail Stock in the Country: According to Jones Lang LaSalle India, organised Grade A retail stock stood at over 92 million square feet across the top seven cities in India as of March 2023. An addition of 53 shopping malls encompassing a total retail space of about 20 million square feet is expected in the top seven cities during 2023-25.

The existing retail stock in the top seven cities offers a potential of about 45 million square feet of retail assets that are REIT-worthy, of which more than half are in Mumbai and the National Capital Region.

In addition, tier-2 and -3 counterparts are emerging as growth corridors for the retail sector. The strong growth prospects of the sector are reflected in institutional investments of $862 million in the retail sector, excluding portfolio deals, since 2021.

“Small investors can now own a pie of rent-yielding retail real estate through this REIT, which also broadens the investor base while adding variety to the REIT offerings,” said Samantak Das, chief economist at JLL India. “Listing of real estate assets through REITs has infused greater transparency in transaction and management structures.”

Retail space across the top seven metros and prominent tier-2/3 cities provides an opportunity of 65-69 million square feet of potential REIT-worthy assets in existing malls, setting the tone for attracting more investment capital in this asset class, Das added.

10 All About REITs: REITs are investment vehicles that own, operate and manage a portfolio of income-generating property for regular returns. REIT-able properties in India include commercial assets ― primarily office spaces ― that can generate steady rental income.

They operate like mutual fund units or shares. REITs will have to be listed on the exchanges and traded like securities. Small investors can buy units of REITs from both the primary and secondary markets, just as they buy shares or mutual fund units.