Mindspace REIT gets Rs 1,125 crore commitment from GIC, strategic investors

MUMBAI: K Raheja Corp’s Mindspace Business Parks REIT has received commitment worth Rs 1,125 crore from institutional investors including Singapore government’s sovereign fund GIC, affiliates of Fidelity Group, Capital Group, Fullerton Group. With this, the proposed REIT has already received response for 25% of the issue size by strategic investors.
Total REIT units proposed to be subscribed by strategic investors will be 4.09 crore and will be allotted to them at Rs 275 per piece, according to the offer document filed with the Securities & Board of India (SEBI).

Apart from K Raheja Corp, US private equity major Blackstone Group is also a stakeholder in the company and both will dilute their respective holdings in this issue.

India’s second REIT is looking to raise Rs 4,500 crore through a fresh issue of Rs 1,000 crore and an offer sale worth Rs 3,500 crore. The issue is scheduled to open on July 27 and will close on July 29.

“The response from strategic investors to the Mindspace REIT shows the continuation of appetite among global investors for Indian quality commercial real estate. In addition to capital growth, higher dividend yields amid lower interest rates make REITs an attractive investable asset class,” said Anuj Puri, Chairman, ANAROCK property Consultants.

India’s maiden listed REIT has so far provided returns of 22%, since its listing last year, including distribution and 14% price appreciation.

Mindspace REITs’ portfolio includes a total leasable area of 29.5 million sq ft with five integrated business parks and five independent offices across Mumbai Metropolitan Region (MMR), Pune Hyderabad and Chennai. It comprises 23 million sq ft of completed area, 2.8 million sq ft under construction and 3.6 million sq ft future development space, as on March 31, 2020.

It has leased additional 7 lakh sq ft to tenants across various properties since April 1 including pre-committed 42,567 sq ft area in its under-construction asset in Chennai. Rents achieved from these new leases are higher than the market rents estimated for the vicinity. As per the revised filing with SEBI, it has completed additional 3.3 million sq ft new offices since its previous filing last year.

However, the company has collected 97.8% and 95.2% of its gross contracted rentals for the months of April and May 2020 during lockdown, respectively. The company has reported net profit of Rs 513.9 crore for the year ended March on the back of total income of Rs 2,026.2 crore.

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