India: Brookfield To Raise $596m Through REIT Listing

The IPO could be launched this year-end or by early 2021 latest, said a person familiar with the development.

The filing of the draft prospectus comes just a day after India’s anti-trust watchdog Competition Commission of India (CCI) approved Brookfield’s acquisition of Bengaluru-based realty firm RMZ’s commercial assets portfolio along with its co-working business CoWrks. The value of the acquisition is pegged at around ₹15,500 crore and is one of the largest buyouts of a commercial real estate portfolio in recent times.

This would be the third REIT in India, after Mindspace Business Parks REIT which debuted on the stock exchange in August and Embassy Business Office Parks that launched last year.

Both Mindspace and Embassy REITs have Blackstone Group Lp, the largest owner of office space in the country, as a minority and majority shareholder respectively.

Shobhit Agarwal, MD and CEO, Anarock Capital said the interesting aspect about India’s emerging REIT landscape is they offer diversity of markets for investors.

The Embassy REIT had assets primarily focused in south India, while assets under Mindspace REIT, owned by K Raheja Corp and Blackstone, are in western India.

Brookfield’s proposed REIT has properties largely based in north and eastern India.

“It’s a non-compete product where each REIT has a different offering and a unique value proposition for customers. Brookfield’s being the third REIT, should be done quickly because there are precedents. Given the success of both the Embassy and Mindspace REITs, it is evident the REIT market is well-accepted both by institutional and retail investors and that the market is deepening,” Agarwal said.

A Brookfield spokesperson didn’t comment.

The REIT is sponsored by an affiliate of Brookfield Asset Management, with around $550 billion in global assets under management as of 30 June. The investor has steadily built a large commercial real estate portfolio in India and acquired non-real estate businesses too across sectors.

The gross proceeds of the fresh issue will be utilized towards repayment of the existing indebtedness of Asset SPVs and for general purposes.

The Brookfield REIT has total assets of 14 million sq ft based in Mumbai, Gurugram, Noida, and Kolkata.

According to the information filed with the regulator, the deal involves the acquisition of real estate projects housed in RMZ Infotech, RMZ Galleria, RMZ North Star Projects, RMZ Ecoworld Infrastructure and RMZ Azure Projects.

Through the Brookfield-RMZ deal, the developer would exit most of their ready commercial assets and are keeping the under-development properties with them, which has over 40 million sq ft of development potential and can be built over time.

“The co-working business of RMZ has been valued at less than ₹800 crore and is just a value addition in the larger deal for Brookfield,” said a person familiar with the development.

The article was first published on livemint.com