Mind Space Realty Pvt.Ltd. Stock Market 2020

Mindspace REIT sets IPO price band at ₹274-275 :

The REIT, only the second in the country to aim at a public listing, plans to raise up to ₹1,000 crore of fresh capital, while its owner K Raheja group and Blackstone will sell units worth ₹3,500 crore through the IPO, taking the total size of the deal to ₹4,500 crore

1. Mindspace Business Parks REIT is an entity jointly backed by realty developer K Raheja Corp and private equity major Blackstone Group. Both the entities are expected to offer a part of their existing shareholding through the offer for sale.

2. The company has leased an additional 7 lakh sq ft to tenants across various properties since April 1. As per the revised filing with Sebi, it has completed an additional 3.3 million sq. ft. of new office space since its previous filing last year.

3. Its portfolio includes a total leasable area of 29.5 million sq ft with five integrated business parks and five independent offices across the Mumbai Metropolitan Region, Pune, Hyderabad, and Chennai.

4. It has about 2,500 operational hotel rooms including the ones from Chalet Hotels. It also owns 6 operational malls (including Inorbit Mall) and 278 retail outlets across India.

5. As of FY20, the company's revenue from operations rose about 10 percent YoY to Rs 15,501 crore. Net operating income (NOI) growth in FY20 stood at 11 percent while in FY19 it was 14 percent.

6. As of March-end, the total market value of its portfolio was Rs 23,675 crore, including the facility management division.

7. As of May end, committed occupancy of its portfolio stood at 92.4 percent and the average rent was Rs 52.5 per sq ft.

8. The company’s clients include the likes of Accenture, Qualcomm, UBS, JP Morgan, Amazon, Barclays, Facebook, and Capgemini.

So is it wise to invest in this REIT? Here's what brokerages suggest:

IIFL Securities

Even as the ongoing COVID-19 poses risks to the near-term projections, the brokerage believes that over time, M-REIT would offer a steady double-digit total return structure, on a steady and growing dividend income stream. It recommends subscribing to the issue.

HDFC Securities

As per the brokerage, portfolio Assets are well diversified across 172 tenants with no single tenant contributing more than 7.7 percent of the Gross Contracted Rentals. It added that approximately 84.9 percent of the Gross Contracted Rentals were derived from leading multinational corporations and approximately 39.4 percent from Fortune 500 companies.

The tenant base comprises a mix of multinational and Indian corporates, including affiliates of Accenture, Qualcomm, BA Continuum, JP Morgan, Amazon, Capgemini, Facebook, Barclays. It has a high-quality tenant base with 92 percent Committed Occupancy along with long-term contracted rentals which provide long-term visibility of its revenue, noted the brokerage. It is well

positioned to achieve further organic growth through a combination of contractual rent escalations, re-leasing at market rents, lease-up of vacant space and new construction to accommodate tenant expansion, it further added.

ICICI Securities

The REIT Portfolio is differentiated by its superior infrastructure. Over the last three financial years and three months ended June 30, 2019, Rs 38.4 crore have been invested to upgrade the assets to ensure a quality tenant experience, said the brokerage. It added that continuous focus on tenant relationships has resulted in many tenants leasing additional space across multiple assets and geographies within their Portfolio.

In addition, the REIT will benefit from the asset base of the KRC group as they have a Right of First Offer (ROFO) on certain of their assets if they seek to sell them, it stated.

Axis Capital

According to the brokerage, their assets provide a community-based ecosystem and they have been developed to meet the evolving standards of tenants and the demands of “new age businesses”, which makes them among the preferred options for both multinational and domestic corporations.

Their Portfolio is located in 4 key office markets of India, namely, Mumbai Region, Hyderabad, Pune and Chennai (“Portfolio Markets”), which accounted for approximately 58 percent of total Grade-A net absorption in the top 6 markets in India, it added. Axis further noted that its Committed Occupancy is 240 bps higher than average occupancy in their Portfolio Markets, as of March 31, 2020, while rental growth has been 320 bps higher for the last 3 fiscal years which also is a positive for the firm.