HomeMarket NewsStocks NewsShould you invest in Mindspace Business Parks REIT IPO? Here's what brokerages suggest

Should you invest in Mindspace Business Parks REIT IPO? Here's what brokerages suggest

Mindspace Business Parks REIT IPO will open for subscription on July 27 and will close on July 29. Mindspace REIT is the second REIT IPO after Embassy Office Parks REIT.

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By Pranati Deva  July 24, 2020, 2:01:34 PM IST (Published)

Should you invest in Mindspace Business Parks REIT IPO? Here's what brokerages suggest
Mindspace Business Parks REIT IPO will open for subscription on July 27 and will close on July 29. Mindspace REIT is the second REIT IPO after Embassy Office Parks REIT. The latter company was the country's first REIT to launch Rs 4,750 crore IPO in March 2019.


The price band of this REIT has been fixed at Rs 274-275 per share. The company is looking to raise up to Rs 4,500 crore from this issue, which consists of a fresh issue of units aggregating up to Rs 1,000 crore and offer for sale of units of Rs 3,500 crore. The bidding for public issue by anchor investors will open on July 24.

The first REIT launched by Embassy Group last year could be bought for a minimum investment of around Rs 2.4 lakh for 800 units as per Sebi norms. Sebi has brought down the minimum investment into REIT from 800 units to 200 units, in a move to encourage more retail participation.

It is Rs 55,000 for 200 units for the Mindspace Business Parks REIT.

Mindspace REIT is the owner of a high-quality office portfolio in India that serves as an essential corporate infrastructure to multinational tenants and has significant embedded growth prospects.

Over the last two decades, India has emerged as a leading hub for technology and corporate services due to its favourable demographics, large talent pool, and competitive cost advantage in providing high value-added services. This has led to an increased demand for quality office space from multinational as well as large domestic corporations, say experts.

Meanwhile, Mindspace REIT has also been assigned a corporate credit rating of ‘Provisional CCR AAA/Stable’ by CRISIL.

So is it wise to invest in this REIT? Here's what brokerages suggest:

IIFL Securities

Even as the ongoing COVID-19 poses risks to the near-term projections, the brokerage believes that over time, M-REIT would offer a steady double-digit total return structure, on a steady and growing dividend income stream. It recommends subscribing to the issue.

HDFC Securities

As per the brokerage, portfolio Assets are well diversified across 172 tenants with no single tenant contributing more than 7.7 percent of the Gross Contracted Rentals. It added that approximately 84.9 percent of the Gross Contracted Rentals were derived from leading multinational corporations and approximately 39.4 percent from Fortune 500 companies.

The tenant base comprises a mix of multinational and Indian corporates, including affiliates of Accenture, Qualcomm, BA Continuum, JP Morgan, Amazon, Capgemini, Facebook, Barclays. It has a high-quality tenant base with 92 percent Committed Occupancy along with long-term contracted rentals which provide long-term visibility of its revenue, noted the brokerage. It is well
positioned to achieve further organic growth through a combination of contractual rent escalations, re-leasing at market rents, lease-up of vacant space and new construction to accommodate tenant expansion, it further added.

ICICI Securities

The REIT Portfolio is differentiated by its superior infrastructure. Over the last three financial years and three months ended June 30, 2019, Rs 38.4 crore have been invested to upgrade the assets to ensure a quality tenant experience, said the brokerage. It added that continuous focus on tenant relationships has resulted in many tenants leasing additional space across multiple assets and geographies within their Portfolio.

In addition, the REIT will benefit from the asset base of the KRC group as they have a Right of First Offer (ROFO) on certain of their assets if they seek to sell them, it stated.

Axis Capital

According to the brokerage, their assets provide a community-based ecosystem and they have been developed to meet the evolving standards of tenants and the demands of “new age businesses”, which makes them among the preferred options for both multinational and domestic corporations.

Their Portfolio is located in 4 key office markets of India, namely, Mumbai Region, Hyderabad, Pune and Chennai (“Portfolio Markets”), which accounted for approximately 58 percent of total Grade-A net absorption in the top 6 markets in India, it added. Axis further noted that its Committed Occupancy is 240 bps higher than average occupancy in their Portfolio Markets, as of March 31, 2020, while rental growth has been 320 bps higher for the last 3 fiscal years which also is a positive for the firm.
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