Draft filed for first IPO of retail REIT
Blackstone-sponsored Nexus Select Trust has filed the draft papers with market regulator Sebi to launch India’s first public issue of retail REIT to raise around $500 million (about Rs 4,000 crore), offering a window to Indian investors to own a piece of India’s retail revolution.
The REIT has a portfolio of 17 operating shopping malls located in 14 major cities spread across north, south and western India, including the Select City Walk at Saket in Delhi, totalling about 9.8 million square feet of leasable area. The trust is also going to have three office space properties (1.3 msf) and two hotels (354 keys) under it.
The offer will include Rs 1,600 crore of fresh issue and the rest would be offer for sale. The principal purpose of the float will be to retire debt. The issue is expected to hit the market in the first half of 2023.
During 2019-20, the last full year of operation before Covid, the REIT had Rs 1,701.18 crore of total income and a profit of Rs 206.7 crore. After two years of losses due to the pandemic which restricted footfall in public places such as malls, the operations turned profitable again in the first three months of this fiscal.
On an income of Rs 475.73 crore, the REIT made a profit of Rs 84.67 crore in three months ended June 30. The REIT enjoys a 93.5 per cent average committed occupancy across its portfolio as of June 30, the DRHP document filed with Sebi revealed.
“We believe that we have invested in among the highest quality assets in prime in-fill locations of India’s major cities such as Delhi, Navi Mumbai, Bangalore, Pune, Hyderabad and Chennai. These cities have limited organised retail stock and future supply of retail space is expected to remain constrained,” the DRHP read.
There are three REIT listed on Indian bourses, all focusing on office spaces. This will be the third REIT sponsored by global investment firm Blackstone. It had earlier launched India’s first REIT — Embassy Office Parks REIT— and then Mindspace Business Parks REIT. Nexus Select Trust will be the first REIT with rent-yielding retail real estate assets.
The REIT was introduced in India a few years ago to attract investment in the real estate sector by monetising rent-yielding assets.