Brookfield launches Rs 3,800-cr IPO for its real estate investment trust

Alternative asset manager Brookfield on Friday announced its Rs 3,800-crore initial public offer (IPO) for its real estate investment trust (REIT), giving investors a share of over 1.4 crore square feet of its commercial properties across the country.

With the IPO coming amidst the COVID-19 pandemic, the global asset manager said there is no data to suggest that work from home is the new normal and exuded confidence that benefits like closely working together for productivity purposes will eventually get teams to work from offices.

REITs are a relatively newer platform in India and so far two REITs have been listed.

The issue will open for subscription on February 3 and close on February 5, and bids can be made for a minimum of 200 units and in multiples of 200 thereafter by bidders other than anchor investors.

Investors will be able to buy a unit of the REIT in the band of Rs 274-275, valuing the trust at Rs 8,327 crore at the upper end of the band, Ankur Gupta, managing partner, real estate said, adding that the net asset value (NAV) per unit is Rs 311.

Gupta said hybrid models of working from home or from outside office spaces were already in place even before the pandemic and added that when the economy is firing on all cylinders, “we need to see how efficiently we deliver on services and products,” he noted.
 

“As long as the economy is doing well, commercial realty has a very strong reason to do well,” he told reporters in a virtual press conference ahead of its IPO.

Admitting that tenants were looking at consolidating their presence very early into the pandemic, he said leasing prospects look robust now.

Brookfield is offering 1.4 crore square feet of its portfolio in the REIT and proposing to reduce its shareholding in the same to 54 per cent post-issue. The proceeds of the issue will be used for de-leveraging, Gupta said.

The REIT is on the lookout for adding another 1.5 crore square feet of space in the next few years and investors in the REIT will stand to get returns in the form of dividends from the long-term leasing out of the commercial properties.

Bulk of the commercial properties are buildings leased out to technology, finance, financial technology, media and other service-sector players, especially multinationals, for long term leases, Gupta said, adding that they have over 90 per cent occupancy at present.

All the properties have been working through the lockdown, collections have been over 98 per cent and 5 lakh square feet of space has been re-leased during the pandemic, he said, adding it has a leasing pipeline of 16 lakh square feet where conversations with prospective clients are on.

Kaku Nakase, president and country head of Bank of America, one of the lead managers, said this is the first REIT in Asia for Brookfield and added that the pandemic has made India more important for multinational companies.