Mindspace REIT makes stock markets debut at 10% premium over issue price2 min read . Updated: 07 Aug 2020, 10:51 AM IST
- The company's IPO with a price band of ₹274-275 was open for subscription between 27-29 July and the issue to raise up to ₹4,500 crore was subscribed 13 times
Mumbai: Mindspace Business Parks REIT has made stock exchange debut at ₹302, 9.81% premium over its issue price of ₹275 on Friday. After Embassy Office Parks, this is the second real estate investment trust (REIT) listing on the bourses.
Owned by K Raheja group and Blackstone, the company's initial public offering (IPO) with a price band of ₹274-275 was open for subscription between 27-29 July. The issue to raise up to ₹4,500 crore was subscribed 13 times.
Ahead of the IPO, Yash Gupta, equity research associate, Angel Broking Ltd, said that the current dividend yield works out to 3.5% for Mindspace REIT, which is projected to increase to 7.5% in FY22. “Though uncertainties due to covid-19-related issues pose risks to earnings in the near term, we believe that in the long run, there will be a steady increase in earnings. Post the IPO, there will also be a debt reduction of ₹3,000 crore for the company, which will bring down debt-to-equity ratio from 2.95 times at the end of FY20 to below 1.0 times, which is a key positive," Gupta added.
Analysts said that despite near-term uncertainties due to covid-19, in the long run, the REIT will offer similar or better post-tax yields as compared to fixed income. However, covid-19-led disruptions in real estate industry still remains a concern.
“Mindspace REIT operates in the industry that may be negatively affected by the disruption to business caused by this global outbreak or maybe required to significantly fix their business model, which may affect their ability to pay rent and decrease the demand for properties," KRChoksey Shares and Securities Pvt. Ltd.
While the company said that it did not face significant disruptions in its operations from covid-19 during the financial year ended 31 March and collected 99.4% of its gross contracted rentals for the month of March, its properties were not fully occupied by the tenants for the months of April and May. As of 31 May, Committed Occupancy of Mindspace REIT’s portfolio was 92.4% and in-place rent across its portfolio was ₹52.5 psf (per square feet).
Mindspace REIT owns office portfolio located in four key office markets of India with a total leasable area of 29.5 msf (million square feet). As of 31 March, Mindspace REIT’s portfolio is diversified with 172 tenants and no single tenant contributed more than 7.7% of its gross contracted rentals. As of 31 March, approximately 84.9% of its gross contracted rentals were derived from multinational corporations and approximately 39.4% from Fortune 500 companies. Its tenant base comprises a mix of multinational and Indian corporates, including affiliates of Accenture, Qualcomm, BA Continuum, JPMorgan, Amazon, Schlumberger, UBS, Capgemini, Facebook, Barclays and BNY Mellon, as of 31 March.