Mindspace Business Parks REIT makes stock market debut at Rs 304 apiece, up 10.5% from issue price

Market experts claim that the success of Mindspace REIT IPO signals that institutions and high net-worth investors are eager to keep REITs as an instrument in their portfolio.

Mindspace Business Parks REIT units surged 10.55% on listing today as it became India’s second Real Estate Investment Trust to get listed on the stock exchanges. The issue that closed after garnering a healthy subscription of 12.96 times began trading at Rs 304 per share, against from Rs 275 per share which was the upper cap of the issue price. Earlier yesterday, Embassy Office Parks REIT, the first such instrument to trade in India, announced its quarterly results where it announced the distribution of Rs 490 crore or Rs 5.83 per unit. REITs have to pay 90% of the net distributable cash flow to unit holders.

The Rs 4,500 crore IPO of Mindspace Business Park REIT received bids for 87,78,24,600 units against 6,77,46,400 units on offer.  Institutional investors oversubscribed their portion of the issue 9.61 times. Mindspace Business Parks REIT also received Rs 1,518 crore from 54 anchor investors. These included the likes of the Government of Singapore, Cohen and Steers Global, HSBC, Fidelity, Nomura, Morgan Stanley, SBI Life Insurance, and HDFC Life Insurance. 

“A REIT is a listed product which allows investors to make liquid investments in real estate in a ticket size as low as Rs. 50,000. Investors can earn a return of 11-12% of which 7-8% which accrues from rental yield is as stable as debt. Combining the stability of debt and upside of equity, REITs are a must have in any investor portfolio,” said Sharad Mittal, CEO, Motilal Oswal Real Estate Fund. Market experts claim that the success of Mindspace REIT IPO signals that institutions and high net-worth investors are eager to keep REITs as an instrument in their portfolio.

Embassy Office Park REIT was listed at a price of Rs 314 per unit in April 2019, and before the market crash in March the price had surged 43% to Rs 467 per unit. REITs offer a healthy dividend income and analysts suggest a long-term value in holding such instruments. However, some do warn of the uncertainty around commercial real-estate that may mar the real estate sector in the near future.