Brookfield Reit Subscribed Just Under 8 Times

The REIT from Brookfield was subscribed 7.97 times. The trust had tapped the capital markets with its primary offer of units in a price band of Rs 274-275 to raise Rs 3,800 crs. The issue was open from Wednesday the 3rd of February to Friday the 5th of February. The company had earlier allotted 6,21,80,800 units to 33 anchor investors comprising of 39 entities. The highest allocation of 1,27,63,600 units or 20.5% has been made to 2 entities of HDFC. This is followed by SBI Life who has been allotted 83,63,600 units or 13.5% of the anchor portion. The third highest is to TATA AIG who has been allotted 61,81,800 units or 9.9%. This effectively means that the top three anchor investors which incidentally happen to be all domestic, have been allotted 43.9% of the total anchor book.

Brookfield Reit Subscription

Bucket Size Shares Applied for Times Oversubscribed
QIB 41455400 198903800 4.80
Non Institution 34545600 407040600 11.78
Total

76001000 605944400 7.97

The issue was subscribed 4.80 times by QIB’s and 11.78 times by HNI’s and 7.97 times overall. The issue garnered subscription of 16,663 crs excluding the anchor portion of Rs 1,710 crs. This effectively means that the company raised a total subscription of Rs 18,373 crs. Compared to this number, the REIT from Mindspace raised much more. That issue had a strategic investor allocation of Rs 1,125 crs and an anchor portion of Rs 1,518.7 crs. Over and above this Rs 2,643 crs, the issue received subscription of Rs 24,140 crs, making a total of Rs 26,783 crs. Broadly speaking the issue from Brookfield as compared to Mindspace received a third less, as subscription.

While there could be a number of reasons for the same, it must also be borne in mind that the environment in August 2020 when Mindspace tapped the markets and now when Brookfield has done so is not comparable. Effect of covid-19 is behind us and further the vaccine having being found and now being administered, makes many things much clearer. Markets have moved up significantly with BSESENSEX now at around 51k against 38k at that time. I believe there is difference in quality of the REIT which has resulted in this difference in subscription. Even more significant in my viewpoint is the perception of the two offerings.

The real proof of the pudding would be in the eating which is when the REIT lists for trading. When Mindspace had listed, it did so with gains of Rs 28-30 or 10% to the issue price of Rs 275, which is the same as that of Brookfield. The area under the REIT is also similar at 28 million square feet for both trusts, if one were to add the 10.3 msf completed area, plus 3.7 msf right to develop, plus 8.3 msf identified assets, and 6.7 msf right of first offer as mentioned by Brookfield.

It would be really interesting to note the performance of Brookfield when it lists around the middle of February.

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