Units of Brookfield India Real Estate Trust and their performance was disappointing on expected lines. The discovered price was 275.05 on BSE and 281.70 on NSE against the issue price of Rs 275. The traded volume at the discovered price was 5,200 units at BSE and 2,86,600 at NSE.

The company had tapped the capital markets with its fresh issue of units in a price band of Rs 274-275. The issue was open between Wednesday the 3rd of February and 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% was made to 2 entities of HDFC. This was followed by SBI Life who was allotted 83,63,600 units or 13.5% of the anchor portion. The third highest was to TATA AIG who was 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.

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 a subscription of 16,663 crs excluding the anchor portion of Rs 1,710 crs.

The REIT opened for trading at Rs 275.05 on BSE, made a high of Rs 280.05, a low of Rs 258.35 and close of Rs 269.96, a loss of Rs 5.04 or 1.83%. On NSE, the open was Rs 281.70 which was also the high, the low was Rs 258 while the close was Rs 268.93, a loss of Rs 6.07 or 2.21%. The traded volume on the two exchanges combined was 95.52 lac units, which was 7% of the issue size and 13% of the non-anchor portion. Delivery volume was 78.17 lac units which were 81.84% of traded volume. It was 5.66% of issue size and 10.29% of the non-anchor portion of 760.01 lac units. A weighted average of the day’s trade was Rs 269.30 on BSE and Rs 269.20 on NSE.

The REIT from Brookfield is the third one to be listed after the earlier two from Embassy and Mindspace. The performance of Brookfield has been the poorest even though it claims to be the largest owner and manager of Real Estate trusts in the world. Why this poor performance? This offer of units had as many as 11 merchant bankers to market this issue of Rs 3,800 crs. The anchor portion was 45% of the issue size. Even with a battery of merchant bankers, the issue performed poorly on listing. The comparison with earlier issues would be apt at this time. Mindspace gained Rs 28.87 or 10.5% on listing day while Embassy gained Rs 14.10 or 4.7%.

The headline number given by Brookfield of leasable area of 28 MSF which matched with that of Mindspace was not accepted by the public. It had many ifs and buts and included a breakup as follows. The breakup was 10.3 msf leasable area plus 3.7 msf land with the right to develop, plus 8.3 msf identified assets and 6.7 msf right of the first offer as mentioned by Brookfield. All three additions entail capex and a period of time to construct and come to the stage where they begin earning lease rent.

There is a very famous saying in the stock market which goes as “BHAV BHAGWAN HAIN”. Translated this simply means that price is king. The markets have given its opinion about the issue from Brookfield and it has had a below-par performance clearly because the issue did not match up to standards. Investors are getting wiser and understand even a complex product like REIT. The poor trading volume would have a bearing on the price-performance in the immediate term and the units would be under selling pressure.

In finality, the record books would state that eleven merchant bankers who handled this public issue saw the same list below the issue price on day one.