Brookfield Asset Management files documents with SEBI for India’s third REIT IPO; looking to raise Rs 4,000-4,500 crore

Canadian investment giant Brookfield Asset Management has filed a draft offer document with market regulator Sebi to monetise it’s Indian rental assets via a REIT or real estate investment trust lPO, sources with knowledge of the matter told Moneycontrol.

This is the third REIT offering in India after the Embassy Office Parks REIT backed by Blackstone and the Mindspace REIT also backed by Blackstone and developer K Raheja Corp.

"The documents have been filed with the market regulator and the plan is to raise between Rs 4,000 to Rs 4,500 crore. The final amount may vary at a later stage depending on the valuations,” said one of the individuals cited above.

“The plan is to launch the IPO by 2020 end or early 2021. It will be a combination of fresh issue and offer for sale. The exact timing depends on feedback from Sebi and the investors,” added a second person.

“There are a total of 11 merchant banks working on this issue which is looking to monetise around 14 million square feet of assets in the initial REIT portfolio.  Morgan Stanley, HSBC, BofA Securities and Citi are the global co-ordination book running lead managers or GCBRLM’s,” a third person told Moneycontrol.

The remaining seven BRLM’s (book running lead managers) include JP Morgan, Axis Capital, Kotak Mahindra Capital, IIFL, JM Financial, SBI Capital & Ambit Capital. Shardul Amarchand Mangaldas is the legal advisor to the issuer and Cyril Amarchand Mangaldas is the advisor to the merchant banks, added a fourth individual.

A real estate investment trust is a company that owns and operates income-producing properties or real estate. Modelled after mutual funds, REITs pool the capital of numerous investors and generate steady income for their investors. REITs own many types of commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centres and hotels.

All the four individuals cited above spoke to Moneycontrol on the condition of anonymity.

Moneycontrol could not elicit an immediate comment from Brookfield Asset Management, the merchant banks and the law firms.

“A combination of high quality sponsors, managers and portfolios is attracting both global and Indian investors to REITs. In 2017, IRDA permitted insurance companies to invest in units of REITs and InVITs which has helped REITs in attracting local institutional capital,” said Nitin Gupta, Managing Director, Macquarie Capital.

Gupta added that the good market performance of the Embassy REIT and Raheja REIT, initial dividend yields at a healthy spread of 75-100 bps over 10-year government bond yields and a flight to safety ( income yielding products) in the wake of the global pandemic are other factors which have triggered the rising demand for REITs.

In October 2016, Brookfield Asset Management acquired Hiranandani Group's offices and retail assets in Mumbai’s Powai suburb, for around Rs 6,700 crores. Back in 2014, the investment firm had acquired 100% stake in four SEZ’s owned by Unitech Corporate Parks (UCP) and 60% stake in its two other domestic assets for Rs 3,500 crore.