Business India ×
  Magazine:
Market News

Published on: July 27, 2020, 12:07 a.m.
A right option
  • Mindspace Business Parks is one of the largest owners of A Grade office space in the country

By Arbind Gupta. Assistant Editor, Business India
A

fter Embassy Office Parks REIT’s IPO in March 2019, Mindspace Business Parks REIT offering is now the country’s second one, which is opening for subscription on 27 July and closing on 29 July, with the price band fixed at Rs274-275 per share. Jointly backed by Mumbai-based realtor K Raheja Corp and private equity major Blackstone group, the REIT IPO will have a fresh issue of units aggregating up to Rs1,000 crore and offer-for-sale of units of Rs3,500 crore. In total, the company is looking to raise up to Rs4,500 crore from this issue.

Mindspace Business Parks REIT IPO has already received commitment worth Rs1,125 crore from institutional investors including Singapore government’s sovereign fund GIC, affiliates of Fidelity group, Capital group and Fullerton group. With this, the proposed REIT IPO has already received response for 25 per cent of the issue size by strategic investors who will be allotted the units at R275 per unit.

Morgan Stanley India Company, Axis Capital, DSP Merrill Lynch, Citigroup Capital Markets India, JM Financial, Kotak Mahindra Capital Company, CLSA India, Nomura Financial Advisory and Securities India, UBS Securities India, HDFC Bank, Ambit Capital, IDFC Securities and ICICI Securities are book running lead managers to the issue.

Mindspace Business Parks is one of the largest owners of A Grade office space in the country with five integrated business parks and five independent offices. It boasts of a well-diversified portfolio of 172 tenants where no single tenant contributed more than 7.7 per cent to its gross contracted rental value. Furthermore, over 84 per cent of its gross contracted rentals are derived from leading multinational corporations and around 39 per cent from Fortune 500 companies. Its tenant base comprises a mix of multinational and Indian corporates, including affiliates of Accenture, Qualcomm, BA Continuum, JP Morgan, Amazon, Schlumberger, UBS, Capgemini,
Facebook, Barclays and BNY Mellon.

The portfolio comprising over 23 million sq ft of completed area, has 92 per cent of committed occupancy. Importantly, the projects are located across four key cities, Mumbai, Hyderabad, Pune and Chennai, which together account for over 56 per cent of the total Grade A net office absorption in top six Indian cities. As on 31 March, 2020, 32 buildings in its portfolio and 16.2 million sq ft of leasable area were LEED/IGBC Gold/Platinum certified/pre-certified.

Led by Vinod Rohira its CEO, the entity has pulled off an impressive performance. Between April 2017 and March, 2020, the company has leased 7.6 million sq ft of office space. It has achieved average re-leasing spreads of 28.9 per cent on 3 million sq ft of re-leased space and leased 4.6 million sq ft of new space to 60 tenants. The entity reported a 21 per cent jump in revenues at Rs2,026 crore in FY20 over FY19, even as the profit for the year ended March 31, 2020 was flat at Rs514 crore. As on 31 March, 2020 the total market value of its portfolio was over Rs23,000crore.

“REITs are an attractive investment offering, especially in the current environment when interest rates are benign. Apart from capital growth, the returns from REITs include dividend returns which are currently over 7 per cent. Overall, REITs promise to offer healthy returns over a 3-5-year period. Investors have had a positive experience from India’s first REIT in the last year,” says Arvind Nandan, managing director, research & consulting of international property consultant Savills India.

Savills India in its recent report has said that India’s sole REIT launched in early 2019, has outperformed the market, not merely in normal circumstances but even during the ongoing pandemic. It has also pointed out that REITs are relatively secure as 80 per cent of the underlying assets in REITs are required to be operational and income-generating. Moreover, the diminishing returns in other investment avenues such as PPFs, FDs, RDs and government bonds when compared to the superior pre-tax yields of REITs, makes it a lucrative option.

Whilst REITs have existed globally since past 60 years and are a $2 trillion asset class currently, India saw its first REIT in March 2019 when Embassy Office Parks REIT (for around 33 million sq ft) got listed on the stock exchanges and paved way for retail investors to participate in the commercial real estate sector.

REITs enable investors with returns through stable rent-yielding cash flows (with 90 per cent of the earnings distributed to unit-holders) and capital appreciation.

Don't miss this

Cover feature

Cash is king

Corporate India is looking at ways and means to shore up its funds. Monetising assets, reducing costs, or raising equity or debt are some of them

Focus

A new chapter

The New Education Policy opens doors for privatisation and growth of edtech

Corporate Report

Adding a regional flavour

Despite recent turbulence, basmati rice maker KRBL is on a strong growth path

Corporate Report

Silent dealmaker

Buying Lummus Technology is a boost for Haldia Petrochemicals

Our letter to you, once a week.
Register with The CSR Weekly for free!

E-MAGAZINE
Cash is king
The Covid vaccine race
On a Roll
FROM THIS ISSUE

Editorial

Technology

Energy

Pharmaceuticals

Government

Market News

Coronavirus Response

Roundup

Companies pour CSR money into the PM CARES Fund

Published on May 11, 2020, 11:20 a.m.

Donations qualify as CSR expenditure and are exempt from additional income tax payments

Healthcare

Partnerships define Flipkart, Walmart support in battle against the virus

Published on May 10, 2020, 5:16 p.m.

Millions of customers were invited to participate in social programmes directed at Coronavirus-related disruptions

Healthcare

Jindal Steel launches social projects in tribal belts to contain the virus

Published on May 1, 2020, 12:09 p.m.

These are prevention measures around pockets within which the company operates

Mobility

Associations and truck companies get together to provide relief to truck drivers

Published on April 26, 2020, 5:35 p.m.

With dhabas gradually opening up, the focus has shifted to initiatives like sanitisation of vehicles

Social Responsibility

Healthcare

Vatsalya Dental offers treatment to poor people in Karnataka and Tamil Nadu

Published on Aug. 10, 2020, 12:27 a.m.

This initiative has given a new lease of life to over 2,500 children

Education

The TI India Citizenship programme aims to give back to the community

Published on Aug. 10, 2020, 12:24 a.m.

Employees have a rich volunteering culture – from monetary donations to committing their personal time

Education

WeiKFiELD goes beyond education

Published on Aug. 2, 2020, 7:59 a.m.

The company pairs its scholarship grants with a comprehensive mentoring programme

Skill Development

Kumar Urban Developments is promoting entrepreneurship

Published on Aug. 1, 2020, 1:44 p.m.

A ‘Training of Trainers’ programme will be the backbone for this initiative

Climate Change

Roundup

Best practices of human-elephant conflict management in India

Published on Aug. 11, 2020, 10:34 a.m.

Recent developments that you may have missed

Air Quality

Praj, ARAI join to clear the air

Published on Aug. 11, 2020, 9:26 a.m.

Much is expected from a new combination of complementary strengths in technology and application

Mobility

Whistledrive is saving money and the environment with its new electric cars

Published on Aug. 10, 2020, 9:01 a.m.

The benefits of driving electric vehicles are highest in nations which use fewer fossil fuels

Energy

SELCO focuses on energy programmes

Published on Aug. 1, 2020, 4:51 p.m.

The company concentrates on the energy nexus with critical needs like health, livelihood and education

Stay ahead of the times.
Register with The Climate Change Weekly for free!