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The Real Estate Investment Trust (REIT) market is highly evolved in countries like Singapore and the UAE. Other countries, including India, are slowly warming up to the idea of REITs and their return potential.

Brookfield India Real Estate Trust, India’s only institutionally managed public commercial real estate company, has announced the launch of an IPO on February 03, 2021. This will be open for subscription until February 05, 2021. Here is all you need to know about the issue.

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Please note: You will not be able to invest in this IPO on Groww via UPI. You can invest in the IPO via the ASBA  facility– available via the net banking interface of your bank account. Almost all banks offer this facility.

Brookfield India Real Estate Trust IPO Details

IPO Date February 03, 2021 to February 05, 2021
Issue Type Book Built Issue IPO
Issue Size Equity Shares of Rs.10 totaling up to Rs.3,800 Crore
Fresh Issue Equity Shares of Rs.10 totaling up to Rs.3,800 Crore
Face Value Rs.10 per equity share
IPO Price Rs.274 to Rs.275 per equity share
Market Lot 200 shares
Min Order Quantity 200 shares
Listing At BSE, NSE

Brookfield India Real Estate Trust IPO Tentative Timetable

Bid/Offer Launch date February 03, 2021
Bid/Offer Last date February 05, 2021
Basis of Allotment finalization date February 11, 2021
Initiation of Refunds February 12, 2021
Credit of Shares to Demat Account February 12, 2021
IPO Shares Listing Date February 17, 2021

About the company – Brookfield India Real Estate Trust

Brookfield India Real Estate Trust is India’s only institutionally managed public commercial real estate trust. Brookfield Asset Management, one of the world’s largest alternative asset managers, is the promoter of this trust. Brookfield India endeavors to be the leading owner of high-quality income-producing commercial real estate assets in key gateway Indian markets, which have significant barriers to entry.

The REIT is being launched based on studies that suggest that by 2030, around 90 million more people will be added to the workforce increasing the demand for office spaces and boosting the commercial real estate sector in the country.

Portfolio Overview of Brookfield India Real Estate Trust

This Initial Portfolio of Brookfield India consists of four large campus-format office parks, located in some of India’s key gateway markets – Mumbai, Gurugram, Noida, and Kolkata. The Portfolio totals 14.0 msf, comprising 9.8 msf of Completed Area, 0.6 msf of Under Construction Area, and 3.6 msf of Future Development Potential. The completed area of the Portfolio is 96% occupied and leased to marquee tenants with 75% of Gross Contracted Rentals contracted with multinational corporations such as Barclays, Bank of America Continuum, RBS, Accenture, Tata Consultancy Services, and Cognizant. 

The REIT also has a 6.8-year Weighted Average Lease Expiry (WALE) that ensures a steady flow of cash. Further, it is positioned to grow organically through a combination of contractual lease escalations, 38% mark-to-market headroom to in-place rents, and near-term completion of the Under Construction Area to meet tenants’ expansion needs. Brookfield India is one of the largest landlords in each of its micro-markets, allowing the Manager to create significant efficiencies in asset management, operations, and tenant offerings. For its Initial Portfolio, the Manager has:

  • Leased 4.3 msf between April 1, 2015, and March 31, 2020;
  • Achieved 89% tenant retention rate between April 1, 2015, and March 31, 2020;
  • Added 3.1 msf of Completed Area through on-campus development between April 1, 2015, and March 31, 2020;
  • Maintained consistently high occupancy and achieved Committed Occupancy of 96% (approximately 220 bps higher than average occupancy in its micro-markets);
  • Invested Rs.118.55 million, Rs.410.62 million, and Rs.321.14 million in FY 2018, FY 2019, and FY 2020, respectively, to renovate its Initial Portfolio including lobby and façade upgrades, elevator modernizations, renovations of public areas, landscaping, the addition of cafes, food courts and boardwalks, modernization of building-wide systems, installing substations and enhancement of other tenant amenities; and
  • Focused on environmental sustainability, and undertaken various energy efficiency initiatives such as installing rooftop solar panels and on-campus sub-stations, which resulted in its properties receiving several accolades

Financials of Brookfield India Real Estate Trust

Here is a quick look at the financial performance of Brookfield India Real Estate Trust over the last three years:

2020 2019 2018
Total Assets 5,378.05 5,043.70 4,893.30
Total Income 981.40 929.83 866.25
Total Expenses 1,189.47 875.73 697.08
Profit After Tax 15.12 -15.75 161.01

All amounts in INR Crore

A quick glance at the financial performance of Brookfield India REIT over the last three years highlights the fact that there has been a steady growth in revenue. During this period, the total income of the company showed growth at a CAGR of 4.25%. The assets of the company grew at a CAGR of 3.20%. Also, if you look at the profitability of the company, Brookfield India suffered losses in 2019. However, it has managed to reverse this trend in 2020. 

SWOT Analysis

Between 2017 and 2019, India was one of the fastest-growing economies in the world. The real estate sector is one of the important sectors of the Indian economy because of its multiplier effect. An impact on this sector has a direct bearing on the economic growth of the country. In India, most of the demand for commercial spaces is from multinational corporates from the US and Europe. Also, commercial rents have grown at a CAGR of 5% over the last five years. 

Over the last decade, the office real estate landscape of India has evolved from single standalone buildings to large modern corporate IT parks with the latest amenities. Multinational tenants display a strong preference for campus developments for a better employee experience. Hence, such campuses operate at lower vacancies. The top seven Indian markets of Chennai, Mumbai, Pune, Hyderabad, Bengaluru, NCR, and Kolkata have seen such campuses grow at a CAGR of 11% between 2008 and Q1 of 2020.

Strengths of Brookfield India Real Estate Trust

  • Brookfield India Real Estate Trust is sponsored by an affiliate of Brookfield Asset Management, one of the world’s largest alternative asset managers and investors, with assets under management of approximately US$550 billion across real estate, infrastructure, renewable power, private equity and credit, and a global presence of over 150,000 operating employees across more than 30 countries, as of June 30, 2020.
  • Unitholders can benefit from Brookfield India’s ability to leverage Brookfield’s extensive network of relationships, its deep capital markets experience, operating expertise, a demonstrated track record of managing capital, and its commitment of resources to the REIT’s Manager. Brookfield India also expects to benefit from access to Brookfield’s risk management, accounting, cash management, and compliance policies.
  • The office parks are among the highest quality office parks in India, distinguished by their size and scale, and located in the key gateway markets of Mumbai, Gurugram, Noida, and Kolkata. They are modern and recently built, with a median age of seven years, and require limited ongoing maintenance capital expenditures.
  • The size and scale of the fully-integrated office parks allow Brookfield India to deliver an all-encompassing workspace ecosystem to its tenants with modern infrastructure and amenities, including daycare facilities, premium F&B outlets, convenience shopping kiosks, shuttle services, multi-cuisine food courts, and sports and fitness facilities, which further create an empowering and vibrant work environment for its tenants’ employees and elevates its properties to have a positive impact on our communities.
  • In its Initial Portfolio, 75% of Gross Contracted Rentals of Brookfield India are contracted with multinational corporations such as Barclays, Bank of America Continuum, RBS, Accenture, Tata Consultancy Services, and Cognizant. Its tenants operate in a diverse range of industries such as technology, financial services, consulting, analytics and healthcare.

Weaknesses of Brookfield India Real Estate Trust

  • The performance of Brookfield India is dependent on the performance of the commercial real estate market in India. Fluctuations in the economy and other conditions may affect the commercial real estate market in India and in turn, its ability to lease office parks to tenants on favorable terms.
  • It derives a major portion of its revenue from a limited number of tenants and sectors. Any unfavorable changes in the sector/industry can impact its profitability.
  • Brookfield India relies heavily on its leasing activities at Candor Techspace G2 for its revenue. Hence, any adverse development there can impact its profitability.

Peer Comparison

Here is a quick look at the performance of Brookfield India in comparison to its peers on some key aspects (the financial year 2019) (all amounts in Rs. Crore):

Total Income Profit After Tax
Brookfield India REIT 981.40 15.15
Embassy Office Parks REIT 2243.96 648.60
Mindspace Business Parks REIT 2026.20 513.9

As you can see above, Brookfield India is a medium-sized company in the REIT segment. Embassy Parks had launched an IPO in 2019 and Mindspace Business Parks in 2020.

Risk Factors

  • The extent to which the Coronavirus disease (COVID-19) may affect its business and operations in the future is uncertain and cannot be predicted.
  • Brookfield India’s business and profitability are dependent on the performance of the commercial real estate market in India. Fluctuations in the economy and other conditions may affect the commercial real estate market in India and in turn, its ability to lease office parks to tenants on favorable terms.
  • Its dependence on rental income may adversely affect the profitability, ability to meet debt and other financial obligations, and its Manager’s ability to make distributions to Unitholders.
  • The Manager cannot assure that it will be able to successfully complete future acquisitions or efficiently manage the assets that it may acquire in the future. Further, any future acquisitions may be subject to acquisition-related risks.
  • There can be no assurance that the Under Construction Area or Future Development Potential will be completed in its entirety in accordance with anticipated timelines or cost, or that Brookfield India will achieve the results expected from such projects, which may affect its reputation, business, results of operations, and financial condition.

Objects of the Offer

Brookfield India Real Estate Trust proposes to utilize the net proceeds from the fresh issue for partial or full prepayment or scheduled repayment of the existing indebtedness of its Asset SPVs and general corporate purposes.

Promoters of Brookfield India Real Estate Trust IPO

  1. BSREP India Office Holdings V Pte. Ltd

Things to keep in mind before investing in the Brookfield India REIT IPO

Here are some things that you need to keep in mind before investing in the Stove Kraft IPO:

  1. Brookfield India REIT IPO is the third REIT listing in India after Embassy Parks REIT and Mindspace Business Parks REIT.
  2. The company has a strong client base and campus-format offices based in some strategic locations across major cities in India.
  3. It booked a loss of Rs.15.75 crore in 2019 but managed to turn profitable in 2020 (profit of Rs.15.12 crore)

FAQs

Q1. What is the Brookfield India Real Estate Trust IPO?

The Brookfield India Real Estate Trust IPO is a Main Board REIT IPO for the issue of equity shares having the face value of Rs.10 totaling up to Rs.3,800 crores. The registrar for the IPO is Link Intime India Private Limited and the shares are proposed to be listed on the BSE and NSE.

Q2. What are the open and close dates of the Brookfield India Real Estate Trust IPO?

The Brookfield India Real Estate Trust IPO opens on February 03, 2021, and closes on February 05, 2021.

Q3. What are the lot size and minimum order quantity of the Brookfield India Real Estate Trust IPO?

The lot size for the Brookfield India REIT IPO is 200 shares and the minimum order quantity is 200 shares.

Q4. What are the allotment and listing dates of the Brookfield India Real Estate Trust IPO?

For the Brookfield India REIT IPO, the allotment will be finalized by February 11, 2021. Further, the shares are expected to be credited to investors’ accounts by February 12, 2021.

Happy Investing!

Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. NBT do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.

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