Mindspace Business Parks REIT IPO set to open next week; check price band for second ever REIT IPO

This will be the second public issue for a REIT, after Embassy Office Parks REIT raised close to Rs 5,000 crore last year.

Mindspace Business Parks Real Estate Investment Trust (REIT) fixed the price band Rs 274-275 per share for its initial public offering (IPO). The issue opens for subscription on July 27 and closes on July 29. Mindspace Business Parks REIT is looking to raise Rs 4,500 crore from the issue, which includes a fresh issuance worth Rs 1,000 crore and an offer for sale of Rs 3,500 crore. Where owners will trim their shareholding. Backed by real-estate developer K Raheja and private equity firm Blackstone, will be the second public issue of a REIT. 

The REIT will also raise Rs 1,250 crore from strategic investors, including  Capital Income Builder, American Funds Insurance Series – Capital Income Builder,  Capital Group Capital Income Builder, Capital Group Capital Income Builder (Canada), American Funds Insurance Series – Global Small Capitalization Fund, GIC Private Limited (for and on behalf of Government of Singapore), GIC Private Limited (for and on behalf of The Monetary Authority of Singapore), Fidelity Central Investment Portfolios LLC, Fidelity Emerging Markets Equity Central Fund – Real Estate Sub, and Fidelity Investment Trust: Fidelity Emerging Asia Fund.

During the pandemic, Mindspace Business Parks REIT was able to collect 99.4% of their Gross Contracted Rentals for the month of March 2020, although properties were not fully occupied by their tenants for the months of April and May 2020. Accenture, Qualcomm, Barclays, JP Morgan, UBS, and Amazon are some of the marquee tenants of Mindspace Business Parks REIT. According to the revised draft prospectus filed last month by the company, Mindspace aims a 10.6% growth in revenue from operations this fiscal while the same is expected to clock at 23% in financial year 2022. 

This will be the second public issue for a REIT, after Embassy Office Parks REIT raised close to Rs 5,000 crore last year. Embassy Office Parks REIT was trading at Rs 347 apiece on BSE Sensex on Tuesday. Embassy Office Parks REIT, as of June 26, 2020, had a market capitalization of around $3.45 billion. This is 17% of the listed real estate stocks’ market capitalization in India, according to Anarock Property Consultants. “With another realty major K Raheja Corp now gearing up to announce their REIT listing, India is better positioned than ever before and there is considerable incentive for making the proposition even more attractive,” said Shobhit Agarwal, MD & CEO – ANAROCK Capital, earlier this month. “From its inception leading up to June 25, 2020, Embassy Office Parks REIT has yielded 14% returns, which is higher than the returns generated by BSE Realty Index, which yielded negative returns of  20% in the same period,” he added.