Mindspace Business Parks REIT lists at 11% premium over issue price of Rs 275

Mindspace Business Parks REIT made a decent stock market debut on Friday, as the scrip got listed at Rs 304 on BSE, a 10.55 per cent premium over its issue price of Rs 275.

With this, the REIT became the second only such issue to be listed on bourses after Embassy Office Park REIT. The latter REIT raised nearly Rs 5,000 crore last year.

The Rs 4,500-crore Mindspace Business Parks REIT issue, which was sold from July 27 to July 29, was subscribed 13 times. It received bids for 87,78,24,600 shares against the total issue size of 6,77,46,400 shares, with the institutional investors category seeing subscription of 10.61 times.

Real estate investment trust (REIT), a popular instrument globally, was introduced in India a few years ago, aimed at attracting investment in the real estate sector by monetising rent-yielding assets.

Analysts noted that the Mindspace REIT’s portfolio assets are well diversified across 172 tenants with no single tenant contributing more than 7.7 per cent of the gross contracted rentals. Approximately 84.9 per cent of the cross contracted rentals by Mindspace REIT were derived from multinational corporations and approximately 39.4 per cent from Fortune 500 companies

The Mindspace REIT portfolio has delivered an in-place rental of 6.7 per cent compounded annually over FY17-20, outpacing markets, and added 6.6 million square feet capacity. For FY20-23, the REIT has projected 17 per cent growth in net operating income (NOI), on the back of 4-5 per cent contracted lease escalations, increasing occupancy from vacant lease up and 2.8 million square feet sqft of new construction, and MTM potential.

Nirmal Bang, which attended an analyst meet by the REIT earlier, suggested the company did not face significant disruptions in the operations from Covid 19 during the financial year ended March 31 and collected 99.4 per cent of gross rentals for March.

“The properties were not fully occupied by the tenants for the months of April and May. As of May 31, committed occupancy of the portfolio was 92.4 per cent and in-place rent across the portfolio was 52.5 per square feet. The company derived 99.4 per cent of the gross rentals from leasing of office premises and has not witnessed a significant decline in the rent receipts during April and May. It collected 97.8 per cent and 95.2 per cent of gross rentals for the months of April and May, May, respectively,” the brokerage said.

The offer was managed by Morgan Stanley India Company, DSP Merrill Lynch, Axis Capital, Citigroup Global Markets India, JM Financial, Kotak Mahindra Capital Company, CLSA India, Nomura Financial Advisory and Securities (India), UBS Securities India, Ambit Capital Private, HDFC Bank, IDFC Securities and ICICI Securities.