Business News/ Markets / Ipo/  Nexus Select IPO: 10 things to know about India's first retail REIT IPO

India's top real estate investment trust is Nexus Select Trust. 14 cities in India are served by Nexus Select Trust, including Delhi, Navi Mumbai, Bengaluru, Pune, Hyderabad, and Chennai. Nexus Select Trust REIT is India's first retail REIT to launch an initial public offering and the issue is going to open today. Twenty anchor investors received shares from Nexus Select Trust, including, among others, SBI Life Insurance Co., ICICI Prudential, HDFC Trustee Co., HDFC Life Insurance Co., Reliance General Insurance Co., and Morgan Stanley. The anchor book accounts for more than 45% of the 3,200 crore Initial Public Offering (IPO) that is scheduled to commence on Tuesday and end on Thursday. Here are the top 10 things to know about the issue. 

Nexus Select IPO

1. Bidding dates: 09 May '23 - 11 May '23

2. Issue price range: Rs 95 - 100

3. Issue size: 3,200 Cr. The public offering consists of a fresh issuance of shares worth up to 1,400 crore and an offer for sale of shares worth up to 1,800 crore.

4. Minimum investment: 15,000 / 1 Lots (150 Shares)

5. Basis of allotment: May 16, 2023

6. IPO Listing Date: May 19, 2023

7. Nexus Select Trust REIT IPO Reservation: 75% of the Net offer for QIB and 25% of the Offer for NII

8. Nexus Select Trust REIT IPO Registrar: Kfin Technologies Limited

9. Lead managers of Nexus Select Trust REIT IPO: Bofa Securities India, Axis Capital Limited, Citigroup Global Markets India Pvt Ltd, Hsbc Securities & Capital Markets, Iifl Securities, Jm Financial Limited, J.P. Morgan India Private Ltd, Kotak Mahindra Capital Company, Morgan Stanley India Company and Sbi Capital Markets.

10. Nexus Select IPO GMP today: Nexus Select Trust latest IPO GMP Today is 4, The expected listing price for the Nexus Select Trust REIT, considering the price band of 100, is Rs. 104 (cap price plus the current GMP). So, according to the grey market, the estimated listing premium is now at 4%.

Few things to know about Nexus Select Trust from Abhishek Jain, Head of Research, Arihant Capital

1. Nexus Select Trust REIT is India's first retail REIT to launch an initial public offering.

2. Twenty anchor investors received shares from Nexus Select Trust, including, among others, SBI Life Insurance Co., ICICI Prudential, HDFC Trustee Co., HDFC Life Insurance Co., Reliance General Insurance Co., and Morgan Stanley. The anchor book accounts for more than 45% of the 3,200 crore.

3. Nexus Industrial REIT has a quality portfolio of industrial, office and retail properties in Canada, with a focus on acquiring and owning industrial properties.

4. Nexus number of Properties:

- Industrial (82 Properties out of which 3 co-owned)

- Office (13 properties out of which 9 co-owned)

- Retail (17 properties out of which 16 co-owned)

5. The units are being issued at a discount in the public issue as against the net asset value (NAV) of 127 per unit.

6. Further, the shareholding of Blackstone in Nexus Select Trust will come down to 43 per cent from 60 per cent after this issue.

Should you subscribe Nexus Select IPO?

A R Ramachandran, Co-founder & Trainer-Tips2trades said “Even though profit growth is back on track, revenue growth coupled with poor growth in Reserves makes the Nexus select trust IPO a slightly risky bet. Investors should wait for listing and buy at lower levels for better returns."

Manoj Dalmia, Founder & Director at Proficient Equities said Nexus Select Trust (NST) is India’s leading real estate investment trust. The IPO proceeds will be used for purposes such as repaying financial debts of Asset SPVs, acquiring stakes in SPVs, and serving general business needs.

NST’s portfolio offers an attractive opportunity to capitalize on India’s consumption growth, with a strong business model and diversified assets acting as a hedge against inflation. As of December 2022, NST maintained an impressive 96.2% average occupancy rate across its portfolio. Tenant sales experienced a notable 11.0% CAGR from FY18 to FY20, while Marginal Rents demonstrated a 7.5% CAGR from CY16 to CY19, according to Manoj Dalmia.

The trust Is poised for organic growth through contractual rent escalations, increased tenant sales leading to higher turnover rentals, and re-leasing at market rates. Notably, NST currently enjoys a first-mover advantage in its segment, which could impact market dynamics post-listing. Investors seeking steady gains may find NST appealing, considering its strong market position and potential for long-term growth, Manoj Dalmia further added.

Views on Nexus Select IPO by CA Manish Mishra, Virtual CFO

Nexus Select Trust REIT IPO is India's first rental yielding retail REIT.

The REIT is focused on rental income from retail properties and has already acquired five properties across India.

The proceeds from the IPO will be used to acquire additional properties.

Investors can benefit from rental income and capital appreciation.

Before investing, it's important to consider the business model, financials, valuation, and risks associated with investing in a REIT.

Explanation of REIT model:

REITs are entities that own and manage income-generating real estate assets, such as commercial properties.

REITs offer investors an opportunity to invest in real estate without owning or managing the properties directly.

Investors can benefit from rental income and capital appreciation.

REITs are required to distribute a significant portion of their income to investors as dividends.

Advice for investors:

Conduct thorough research and due diligence before making any investment decisions.

Evaluate the potential demand and growth prospects for the properties owned by the REIT.

Look at the REIT's financial statements, including revenue, profit, and debt levels.

Consider the price of the IPO and whether it represents a fair valuation of the underlying assets.

Evaluate the risks associated with investing in a REIT, including potential market downturns, changes in interest rates, and changes in consumer behavior that could impact the retail sector.

Nexus Select Trust’s is Blackstone-backed (US) primary offering for REIT (Real Estate Investment Trust) opens for subscription on Today, May 9. The owner of India's largest mall assets is likely to raise via 3,200 this issue by selling its units in the price band of 95-100 apiece, which concludes on Thursday, May 11 2023.

The offering consists of fresh issues (IPO) of 14 crore units worth 1,400 crore and an offer for sale (OFS) of 18 crore units of 1,800 crore. The total issue is for 32 crore units. Nexus Select is India’s maiden retail assets-led Real Estate Investment Trust (REIT). They offer low-cost high-quality retail assets (Offices & commercial Properties) services offering they will get the benefit of first mover in market.

Based on the fair asset value of 25,444 crore, the calculated net asset value per unit is 120.9, which is 20.9 per cent higher than the ceiling price of the issue. At a higher price band, the calculated pre-tax yield on the investment is approximately 8% which is good.

"Nexus is growing significantly in the last three fiscal years and is well-positioned to report continued growth in the future. Only thing which I am concerned about is company want use most of this IPO in reducing its debt liability however they have asset against it.
So for us it’s a “Subscribe" is you have trust in this business category and having a midterm to long tern holding view in this business which highly scalable, you can subscribe if you are trying to subscribe only for listing gains than you can avoid it" said V.L.A. Ambala (SEBI Registered Research Analyst), Stock Market Today (SMT).

Mr. Prateek Toshniwal who serves on the advisory boards of Toshniwal Ventures Pvt. Ltd. and Funding Possibilities said this launch marks a significant milestone for India's real estate market, introducing the country's first retail mall-focused REIT. With backing from Blackstone, one of the world's leading investment firms, Nexus Select Trust holds promising prospects.

The portfolio of 17 Grade A malls, 2 hotels, and 3 office assets demonstrates the diverse range of assets offered by the REIT. Unlike other REITs in India, which primarily focus on office spaces, the retail mall focus of Nexus Select Trust presents a unique investment opportunity. Retail malls have the potential to generate steady rental income, and with the growing consumer spending and urbanization in India, the retail sector holds considerable growth potential.

While it is essential to consider the risks associated with any investment, the Nexus Select Trust REIT IPO presents a compelling opportunity. Investors should carefully analyze the financials, growth projections, and market dynamics before making a decision. 

As a professional financial advisor, I encourage investors to seek advice based on their individual financial goals, risk appetite, and investment horizon. A comprehensive evaluation of the IPO and consultation with a financial advisor can help investors make an informed decision regarding their participation in the Nexus Select Trust REIT IPO.

Vipul Das
Vipul Das is a Digital Business Content Producer at Livemint. He previously worked for (OneIndia News) and has over 5 years of expertise in the finance and business sector. Stocks, mutual funds, personal finance, tax, and banking are among his specialties, and he is a professional in industry research and business reporting. He received his bachelor's degree from Dr. CV Raman University and also have completed Diploma in Journalism and Mass Communication (DJMC).
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Updated: 09 May 2023, 07:56 PM IST
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