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    Brookfield REIT IPO: Issue subscribed 77% on Day 2

    Synopsis

    The corporate and retain individuals' portion was fully subscribed by the end of the second day.

    real-estate-afp
    The Brookfields REIT issue is set to close on Friday.
    NEW DELHI: The initial public offer (IPO) of Brookfield India Real Estate Trust was subscribed 77 per cent by the end of the second day of bidding today, driven largely by corporate and individual investors.

    The issue received applications for 5,88,18,600 units by 5:00 pm. The corporate and retain individuals' portion was fully subscribed by the end of the second day, whereas the allotment for institutional investors was subscribed 53 per cent.

    The low turnout by institutional investors is in line with usual trends, as they typically 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. Some have advised subscribing to the issue from a long-term perspective, while others are neutral on it because citing uncertainties around the company's weak financials and high debt on the books.

    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, including 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 the 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 has a ‘subscribe’ call on the issue 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 months of this fiscal year.

    Before the IPO opened for public bidding, Brookfield REIT raised Rs 1,710 crore from anchor investors.

    Sources said the anchor investment round saw participation from financial institutions such as HDFC AMC, Tata AIG, HDFC Life, SBI Life, Kotak Mahindra AMC and Bajaj Holdings. Foreign portfolio investors such as Schroders and Prusik also invested.



    ( Originally published on Feb 04, 2021 )
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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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