Mindspace Business Parks REIT IPO
IPO Synopsis
IPO Synopsis
Mindspace Business Park REIT (MBPR) is among the largest owners of quality office portfolio with a total leasable area of 29.5 msf and is one of the largest Grade A office portfolios in the country.
Initial offer of up to (*) Units (as defined hereinafter) of Mindspace Business Parks REIT (Mindspace REIT) for cash at a price of Rs (*) per Unit aggregating up to Rs. 4500 Crores consisting of a fresh issuance of up to (*) Units by Mindspace REIT aggregating up to Rs. 1000 Crores (Fresh Issue) and an offer for sale of up to (*) Units by the Selling Unitholders (as defined hereinafter) aggregating up to Rs. 3500 Crores (Offer for Sale and together with the Fresh Issue, the Offer ). Price Band: Rs.274 to Rs.275 per Unit. Minimum Order Quantity - 200 Units.
Why subscribe?
Higher Returns: The dividends received from REIT are tax free. Major component (~93%) of MBPR returns are expected to be from dividends, hence expected to yield a return of 7.74% - 8.3% FY22/FY23 compared to ~3% and 5% on FD and Debt MF respectively on post tax basis. Currently ~41% returns distributed by Embassy REIT are in the form of interest which taxable in the hands of investors.
Improving Cash flows at lower cost: Net proceeds from issuance of fresh units will be used to repay debt. Also raising funds at REIT level (Provisionally rated AAA by CRISIL/Jun2020) to replace debt at asset SPVs is expected to boost NDCF. Hence, improvement in yields is a possibility.
Key Risks: Slower absorption of commercial properties due to Covid-19
Suitability: Subscription recommended for investors seeking returns similar to debt asset class.