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Blackstone-backed Mindspace REIT climbs on debut after $600 mn IPO

Mindspace Business Parks REIT made a strong debut on the stock markets on Friday with its units listing 10.5% higher than the initial public offering price.

Units of the real estate investment trust sponsored by K Raheja Corp and private equity firm Blackstone opened for trading on the BSE at Rs 304 apiece, compared with the issue price of Rs 275 apiece.

The units traded between Rs 308.90 and Rs 299, before ending the day at Rs 303.87. This gives it a market valuation of Rs 18,020 crore. The BSE’s 30-stock benchmark Sensex ended little changed.

Mindspace’s positive start follows India’s second public issue of an REIT that was covered almost 13 times thanks to high demand from investors across categories.

This is the second IPO of an REIT in India. Embassy Office Parks REIT, which is also backed by Blackstone, went public last year. Its units had listed at the issue price of Rs 300 apiece but jumped to a high of Rs 518 by early March this year, before losing most gains after the stock markets crashed. The units are now trading around Rs 374 apiece.

Mindspace had filed its draft proposal for the IPO with the Securities and Exchange Board of India in January this year. The REIT raised Rs 4,500 crore ($600 million) through the IPO. This included a fresh sale of units worth Rs 1,000 crore and an offer for sale of Rs 3,500 crore by existing unit holders including Blackstone and K Raheja group entities.

Blackstone Real Estate Partners is one of the key investors in the REIT. It had acquired a bunch of commercial real estate assets of K Raheja Corp in Mumbai, Hyderabad and Pune in 2017.

Mindspace will use the proceeds from the fresh issue of units for repaying its debt, redeeming its preference shares and for general corporate purposes.

Mindspace owns a portfolio of properties in India’s four key office markets. Its portfolio has a total leasable area of 29.5 million square feet as of March 2020. This is one of the largest Grade-A office portfolios in India.

Of the total, 23 million sq ft is completed area, 2.8 million sq ft is under construction and 3.6 million sq ft is earmarked for future development. The portfolio has five integrated business parks and five independent offices.

The portfolio has 172 tenants such as Accenture, Qualcomm, JP Morgan, Amazon, Schlumberger, UBS, Capgemini and Facebook. No single tenant contributed more than 7.7% of its gross contracted rentals as of March 2020.

The REIT clocked a net profit of Rs 513.9 crore for 2019-20 on revenue from operations of Rs 1,766 crore. Its net profit was Rs 515.4 crore for 2018-19 on revenue from operations of Rs 1,431.6 crore.

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