Investment Shastra

Brookfield India REIT IPO Review; Avoid

Brookfield India REIT IPO Details:

Issue Open Date: 3rd Feb 2021

Issue Close Date: 5th Feb 2021

Equity Shares offered: 13.8 Cr

Price Band: ₹ 274-275

Issue Size: 3,800 Cr

Min Lot Size: 200 (Rs. 55,000)

Recommendation: Avoid

Purpose of the Brookfield Indian REIT IPO

  • Partial/ full payment of debts of the Asset SPVs.
  • Meeting general corporate purposes.

About Brookfield India REIT

Brookfield India Real Estate Trust is India’s only institutionally managed public commercial real estate company. It is sponsored by an affiliate of Brookfield Asset Management (BAM), a part of Brookfield Group.

The company has campus-format office parks strategically located in Mumbai, Noida, Gurugram, and Kolkata. The portfolio of the company comprises 14.0 mn sq ft with 10.3 mn sq ft completed area, 0.1 mn sq ft under construction, and 3.7 mn sq ft area of future development. Its completed area has an occupancy rate of 92%.

The clientele of the company comprises MNCs like Barclays, Bank of America Continuum, RBS, TCS, Cognizant, and Accenture are some of the clients of Brookfield India Real Estate Trust.

Brookfield India REIT IPO offices

brookfield india reit ipo offices

brookfield india reit ipo offices 1

What is REIT?

what is reit?

REIT is a pool of developed assets held and protected by the Trustee. It receives rental from the lessee and managers handle the collection and maintenance of facilities. This is close to holding actual real estate in exchange for earning rent on the same. Usually commercial real estate is best to own as they accrue better rental yield and growth in yield in lines with inflation, assuming no competition or demand issues.

Real Estate as an asset class provides non-correlated returns to equity and gold. It also has a regular income similar to Fixed Income. Investors with a smaller surplus (less than Rs. 3-5 Cr) can diversify their assets into real estate through REIT as smaller portfolios can’t invest in real estate directly due to the large ticket size of the property. For a larger portfolio, investing in 1-2 commercial properties or shops is a good way to diversify their savings.

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MoneyWorks4me Opinion

Brookfield India REIT holds premium properties in four different metropolitan cities where demand for commercial properties is high. It has an average committed occupancy of 87% and the largest 10 clients contributed 77% of the leased area as of September 2020.

India is experiencing high growth in captive support services of MNCs and existing IT services companies thanks to low-cost human resources and English speaking population. This makes commercial REIT attractive as they will have good demand for companies shifting their backend/support to India.

We are very positive about the opportunity available to invest in Real Estate through REIT, but we are cautious to make any decision about making a Real Estate investment today due to i) lower yield, ii) uncertainty on near to medium-term trend in real estate iii) limited growth avenues within this REIT to compensate paying up.

Based on implied income distribution (yield) of 8% and limited growth potential we recommend Avoid.

There might be a fall in REIT price to reflect better yield as distribution may remain constant while a fall in REIT price increases our Return on Investment. We will be tracking the REIT for investment at a later date.

IPO Activity Date
IPO Open Date 3rd Feb 2021
IPO Close Date 5th Feb 2021
Basis of Allotment Finalisation Date 11th Feb 2021
Refunds Initiation 12th Feb 2021
A credit of Shares to Demat Account 12th Feb 2021
IPO Listing Date 17th Feb 2021

Date QIB NII Total
3rd Feb 2021, 05:00 0.03x 0.26x 0.15x
4th Feb 2021, 05:00 0.53x 0.96x 0.77x
5th Feb 2021, 05:00 4.78x 11.52x 7.94x

What is Brookfield India REIT IPO?

Brookfield India REIT IPO is an IPO of 13.8 Cr equity shares with a face value of ₹10 aggregating up to ~₹3,800 Cr. The issue is priced at a price band between ₹274 to ₹275 per share.

Link Intime India Private Ltd is the registrar for the IPO. The shares are proposed to be listed on BSE, NSE.

When Brookfield India REIT IPO will open?

The IPO opens on Feb 3rd, 2021, and closes on Feb 5th, 2021, between 10.00 AM to 5.00 PM.

What is the lot size of Brookfield India REIT IPO?

The lot size is in the multiple of 200 with a minimum order quantity of 200 Shares.

How to apply for Brookfield India REIT IPO?

You can apply for Brookfield India REIT IPO online using either UPI or ASBA as a payment method. ASBA IPO application is available in the net banking of your bank account. UPI IPO application is offered by brokers who don’t offer banking services like Zerodha.

When is the Brookfield India REIT allotment?

The finalization of the Basis of Allotment for Brookfield India REIT IPO will be done on 11th Feb 2021 and the allotted shares will be credited to your Demat account by 12th Feb 2021.

When is the Brookfield India REIT listing date?

The tentative date of Brookfield India REIT IPO listing is 17th February 2021.

Is it worth investing in Brookfield India REIT IPO?

We are very positive about the opportunity available to invest in Real Estate through REIT, but we are cautious to make any decision about making a Real Estate investment today due to i) lower yield, ii) uncertainty on near to medium-term trend in real estate iii) limited growth avenues within this REIT to compensate paying up.

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Rushikesh Bhise

Rushikesh Bhise

Rushikesh Bhise, a CFA level 3 Candidate with 1.5 years of experience in Equity Research. A Post Graduate in Commerce from Pune & a CA-Inter, he is a finance enthusiast and has worked in the Investment Banking domain. He has a keen interest in analyzing the business of the companies and enjoys reading finance literature. His hobbies include reading books, playing Piano and practicing Martial Art.

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