The issue received applications for 1,62,42,600 units by 11:45 am. The quota reserved for retail and corporate investors was subscribed 44 per cent, and that for institutional investors 0.03 per cent.
The low turnout by institutional investors is in line with usual trends as they usually bid for any IPO on the last day. The Brookfields REIT issue — which is the third ever REIT to be launched in India — is set to close on Friday.
Analysts are mixed on the issue with some advising to subscribe for the long term while others are neutral on it because they believe given the uncertainties, weak financials and high debt on the book, it doesn’t make the case.
Yash Gupta of Angel Broking said that due to the current uncertainties around Covid-19 and proliferation of work from home we expect that demand for commercial real estate to be muted.
“Though the REIT has incurred losses in FY20 and has not paid out any dividends, they expect to pay a yield of 7.5 per cent in FY23 which we believe is aggressive and may be difficult to achieve,” he said.
Institutional investors can bid for 75 per cent of all units while other investors that include corporates, HNIs and retail investors can bid for the rest.
“The REIT instrument is most popular in global markets, where REITs usually invest in ready-to-use or leased-out properties acquisitions and reduce gestation periods. Notably, REITs must be looked at from a cash flow perspective and Brookfield REIT generated cumulatively Rs 1,140 crore FCF through FY18-1HFY21,” said Vikas Jain, Analysts at Reliance Securities.
He added that given substantial reduction in debt level after fundraising, he expects saving on finance cost which should aid the company to generate positive net distributable cash flows from FY22E onwards. Jain recommends ‘subscribe’ from a long-term perspective.
The REIT includes five properties in Mumbai, Delhi-NCR and Kolkata that yielded Rs 455.14 crore in the first six month of this fiscal.
Ahead of the IPO opened for public bidding, Brookfield REIT raises Rs 1,710 cr from anchor investors. Sources said the anchor investment round saw participation from financial institutions such as HDFC AMC, SBI Life, Tata AIG, HDFC Life, Kotak Mahindra AMC and Bajaj Holdings, among others. Foreign portfolio investors such as Schroders and Prusik also invested.
