The maiden issue public issue of Brookfield India Real Estate Trust (REIT), India\’s only institutionally managed public, commercial real estate vehicle backed by Canadian asset manager Brookfield Asset Management Inc will be available for subscription from 3rd to 5th of February 2021.
The company intends to use the proceeds of the IPO for repaying its debts and for general corporate purposes.
Price band of the Brookfield India REIT IPO
The price band for the Brookfield India REIT IPO set at Rs. 274 – 275.
The minimum lot size is of 200 shares.
The issue size for Brookfield India REIT IPO is Rs 3800 crore at the higher price band.
Shares of Brookfield India REIT are expected to be listed around 17th February 2021.
Key opportunities and strengths
Strong backing by sponsor, Brookfield Asset Management a company with global expertise
Brookfield India REIT is an affiliate of Brookfield Asset Management, one of the world\’s largest alternative asset managers and investors, with assets under management of approximately US$550 billion across real estate, infrastructure, renewable power, private equity and credit, and a global presence of over 150,000 operating employees across more than 30 countries. Listed on the NYSE and TSX, Brookfield Asset Management had a market capitalization of over US$50.51billion, as of September 20, 2020.
High-quality real estate assets
Brookfield India Real Estate Trust (REIT) owns four large campus-format office parks strategically located in markets such as Mumbai, Gurugram, Noida and Kolkata with easy access to mass transportation, high barriers to entry for new supply, limited vacancy and robust historical rental growth rates. Many of the company’s office parks command premium rents and have higher occupancies than the average rents and occupancies of the broader markets they are located within.
Diversified client base
The company has tenants from diverse industries such as technology, financial services, consulting, analytics, and healthcare. Its clients include multi-national corporations such as RBS, Accenture, Tata Consultancy Services, Barclays, Bank of America Continuum and Cognizant.
Placemaking refers to a multi-faceted approach to planning, designing, and managing public spaces to create spaces that promote people\’s health, happiness, and well-being.
Due to the size and scale of company’s fully-integrated office parks, the company is well-placed to deliver a unique \”service-based experience\” to its tenants encompassing workspace ecosystem with modern infrastructure and amenities, including day-care facilities, premium F&B outlets, convenience shopping kiosks, shuttle services, multi-cuisine food courts and sports and fitness facilities.
Increasing growth opportunities in India for technology and corporate services
Over the last two decades, India has become the preferred destination for technology and corporate services due to the easy availability of highly skilled and young workforce and a distinct competitive cost advantage.
According to estimates, over 90 million people are expected to be added to the workforce by 2030, resulting in increased office absorption, creating many opportunities across India\’s commercial real estate market. The global spending on software and Software as a service (SaaS) is expected to grow at a tremendous pace over the next 5 years.
India\’s technology sector in also expected to grow at a CAGR of 13% to US$350 billion by FY 2025 from an estimated US$191 billion in FY 2020 due to the huge pool of skilled and talented workforce, competitive price advantage and the country\’s favourable demographics.
Key challenges to keep in mind before investing in Brookfield India REIT IPO
The Covid-19 pandemic of 2020 has changed the way we live, travel and work like never before. As a result of the associated lockdowns, many businesses were forced to shut their offices temporarily.
Despite the lifting of lockdown, the re-emergence of the Covid-19 pandemic or similar pandemics in the future may affect tenants\’ business and operations, thus affecting their ability to pay rents on time or in full or obtaining new lease commitments due to a general economic slowdown.
Bottom line: Should you invest in the Brookfield India REIT IPO?
Investing in REITs like Brookfield India REIT IPO offers investors an opportunity to earn a portion of the income generated through real estate in the form of dividends or capital appreciation, without the hassles of buying, managing or financing property.
However, pandemics or economic downturns can affect the business of such companies adversely. Two of its peers in the listed space such as Embassy REIT and Mindspace REIT have generated only average returns till date post listing in 2019 and 2020 respectively. Invest wisely after detailed research.
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