View – Neutral
ISSUE HIGHLIGHTS
Brookfield India Real Estate Trust is all set to hit the markets with its IPO. This will be the third REIT IPO after the successful listing of Blackstone Group Inc backed Mindspace Business Parks REIT last year and Embassy Office Parks REIT in 2019.
Brookfield India is backed by Canadian asset manager – Brookfield Asset Management Inc and is looking to raise INR 3,800 crores through this IPO.
BPG Holdings Group Inc, a Brookfield entity, holds a 99% stake in the REIT.
Brookfield India Real Estate Trust is managed by Brookprop Management Services Private Limited.
Issue Details
Proportion For:
Institutional Investors – 75%
Non Institutional Investors – 25%
Strengths
- Global sponsorship with local expertise
- Dominant & strategically located properties
- Placemaking capabilities
- Diversified blue chip tenant roster and cash flow stability
- Significant identified internal and external growth opportunities
- Experienced senior management team.
- Institutional corporate governance framework & strong alignment of interests
Valuation
Brookfield India reported its EPS at 15.1 for the year ended March 2020, bringing the IPO valuation to a P/E of 18.2 at upper price band, against sector PE of 26.5.
However, it bears the risk of high Debt to EBITDA ratio, which can be considered a negative point.
So, we stay neutral on our views for the IPO.
Utilization of Funds
Background highlights of the company in brief
- The Brookfield India Real Estate Trust is India’s only institutionally managed public commercial real estate vehicle. It is sponsored by an affiliate of Brookfield Asset Management (Brookprop Management Services Private Limited), one of the world’s largest alternative asset managers with approximately USD 575 billion in AUM, as of September 30, 2020, across real estate, infrastructure, renewable power, and private equity and credit strategies.
- Brookfield Asset Management has a global presence of over 150,000 operating employees across more than 30 countries, as of September 30, 2020.
- As of September 30, 2020, Brookfield Asset Management has over USD 200 billion of real estate AUM, and over 500 Msf across multiple real estate asset classes, with strong real estate capabilities in leasing, financing, development, design, construction and property management.
- In India, the company has a decade-long presence and manages a portfolio of approximately USD 17 billion across real estate (USD 4.6 billion), infrastructure (USD 9.7 billion), renewable power (USD 0.6 billion) and private equity (USD 2.1 billion) as of September 30, 2020.
- The Brookfield India Real Estate Trust comprises of grade-A commercial assets located in four major cities – Mumbai, Gurgaon, Noida and Kolkata.
- Multi-national corporations like Barclays, Bank of America Continuum, RBS, TCS, Cognizant, and Accenture are some of the clients of Brookfield India Real Estate Trust.
- The company’s initial portfolio of four large campus-format office parks, which are “business-critical” totals to 14.0 M sf, comprising 10.3 M sf of Completed Area, 0.1 M sf of under construction area and 3.7 M sf of Future Development Potential and comprises of Kensington, Candor Techspace, Sector 21, Gurugram, Candor Techspace, Sector 62, Noida and Candor Techspace, Rajarhat, Kolkata.
- The competitive strengths of the company has translated into the office parks outperforming in their micro-markets through a marquee tenant roster, high and consistent occupancy levels, strong renewal and expansion history with existing tenants and outsized rental growth.
- The company’s strategy is to address the real estate demand by owning and operating large “fully-integrated”, “campus style” office parks in established locations, and providing a complete ecosystem to its tenants and their employees.
Briefing about directors & key managerial personnel
(Board of Directors – Brookprop Management Services Private Limited)
Briefing Financials
Balance Sheet
Statement of Profit and Loss
Property Wise Rental/Operating Income
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