K Raheja Corp and Blackstone-backed Mindspace Business Parks REIT made its debut on the bourses today. On the BSE, it got listed at Rs.304 v/s its issue price of Rs.275.

This is the second REIT to list on the exchanges – the first one was Embassy Office Parks REIT.

The IPO was subscribed 13 times with HNIs taking the lions share – it was subscribed 15.77 times while institutional investors was at 10.61 times.

Mindspace Business Parks REIT, 85% owned by K Raheja Corp Group and balance 15% by PE giant Blackstone, owns 29.5 million sq ft (msf) office portfolio as of 31-3-20, comprising 23 msf of completed area, 2.8 msf of under construction and 3.6 msf of future development area, in Mumbai, Hyderabad, Pune and Chennai. Of the 172 tenants, no single tenant accounts for more than 8% of gross contracted rentals. The trust continued to collect ~95% of contracted rent in April and May 2020 (similar to Embassy REIT) since these are long term leases to global companies, some with lock-in clauses. Hence, the pain, if any in the commercial real estate sector, will be felt more gradually probably when the leases come up for renewal.

In our IPO Analysis, we had said, “Given systemic risk as well as those at sector and promoter level, the returns do not appear favourable. Hence, we recommend an ‘avoid’ to the issue of Mindspace Business Parks REIT.”