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All About Mindspace REIT IPO

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Year after India’s first REIT (REIT Real Estate Investment Trust) list in the market, the second one is all set to step its foot into the market- Mindspace Business park.

Mindspace Business Park is a brand of commercial and industrial parks established by K Raheja Corp. Located in MumbaiHyderabadChennai, and Pune, the industrial hubs offer offices, residential towers, entertainment facilities, and other retail businesses.

What is Mindspace REIT?

Mindspace REIT (Real Estate Investment Trust) is a firm through which one can invest his money in physical real estate. 

mindspace

REIT is as same as mutual funds, where mutual funds invest in the stock market and debt instruments and the other REIT invests in physical real estate. Generally, REIT raises funds from investors and invest it in commercial real estate. In return, the investor gets a share from lease and rent revenue. According to new SEBI rules & regulations REIT must share 90% of income in the form of dividends with investors. In developed countries, REIT is the main source of real estate. On the other hand, in India, it gets legalized in 2014.

Mindspace REIT is going to offer its IPO (Initial Public Offering) from July 27th, 2020 to July 29th, 2020. In these 3 days Mindspace about to offer its IPO of worth 4,500 crore rupees. Out of 4,500 3,500 are Offer for sale (shares from their investor- K. Raheja Corp. & Blackstone) and 1000 crore worth share are the new units from the company.

Mindspace IPO came with a base price of 274 and 275 per unit with a minimum buying of 200 units makes it cost about 55,000 rupees for every 200 units. This IPO came up with a ratio of 75% and 25% as 75% of its stake is reserved for an institutional investor like govt. of Singapore, NOMURA Trust & Banking & HSBC Global, etc Investment and remaining one’s are for return Investors.

If we talk about debt, after listing Mindspace REIT would be in 4,000 crore rupees debt.

In the context of Profitability Mindspace REIT has registered profit- 

  • In the fiscal year 2017 – 231 crores rupees
  • In the fiscal year 2918 – 168 Crore rupees
  • In the fiscal year 2019 – 515 Crore rupees
  • In the fiscal year 2020 – 514 Crore rupees

REIT got 2.95 Crore sq ft leasable area of which 92% is occupied in their lease business, they have 180 clients and most of them are MNC’s & fortune found Companies if look for the sector's perspective then most of their clients are from tech Co. and service sectors.

REIT got a strong client base Like Facebook, QUALCOMM, UBS, Barclays & Schlumberger where co. got it’s 43% of rental revenue. Companies' marginal revenue of about 68% is from rental along with these JP Morgan, Amazon & Capgemini are to their clients.

REIT IPO

REIT ties long term lease contracts of about 5 – 10 years with a rental raise every 3 years about 12% - 15% which gives them long term business.

Last year Embassy REIT Comes up with IPO with a base price of 300 Rupees per unit and a minimum investment of 2,40,00. That time the minimum amount of investment in REIT was set to 2,40,000 rupees which is recently decreased to 50,000 rupees.

Embassy REIT has distributed 1882 crore divided among its investors, with 21% of capital appreciation in a year as it is short term result so we can’t count on them, for now, investors got 6.68% dividend income.

Taxation has some positive and negative impact on REIT-  

  • NO amount of tax is charged in REIT dividend 
  • If one is selling his equity share within 3 years of his purchase would be charged 15 % of tax. STCG (Short Term Capital Gain)
  • IF in selling his equity after 3 years of its Purchasing and his profit is under 1 lakh, he wouldn’t charge any tax on it.
  • If it is selling his stake after 3 years with more then 1 lakh profit that person must be charged with (Long term capital gain) LTCG tax ‘

Mindspace major clients are from the tech sector and due to COVID 19 pandemic, they went for the work for the home which going to affect their business as their main client TCS (Tata Consultancy Services) has already decided to shift 75% of their workforce in work from home. 

All these situations are going against Mindspace REIT IPO or may harm it but the company has full confidence in them.

If you’re interested in buying Mindspace REIT IPO you must have a Demat Account.

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author

Shubham