Nexus Select Trust REIT IPO: All You Need To Know
The subscription for the IPO opens on May 9 and closes on May 11.
Blackstone-backed Nexus Select Trust, with a portfolio comprising 17 Grade A urban consumption centres, will launch its maiden public offering on Tuesday, May 9, to raise Rs 3,200 crore. The issue closes on May 11.
IPO Details
The company has fixed a price band of Rs 95–100 per share. The bidding for anchor investors will open on May 8.
The public issue comprises a fresh issuance of shares aggregating up to Rs 1,400 crore and an offer for sale of shares by the selling shareholders aggregating up to Rs 1,800 crore.
The REIT, through anchor investors, raised Rs 1,439.99 crore.
Nexus Select Trust allotted shares to 20 anchor investors, including SBI Life Insurance Co., ICICI Prudential, HDFC Trustee Co., HDFC Life Insurance Co., Reliance General Insurance Co. and Morgan Stanley, among others.
Shares were allotted at the upper limit of the price band—Rs 100.
Objective Of Share Sale
The company aims to use the net proceeds towards partial or full repayment or prepayment and redemption of certain financial indebtedness of the asset special purpose vehicles and the investment entity; acquisition of stakes and redemption of debt securities in certain asset SPVs; and general purposes, it said in its draft red herring prospectus.
Nexus Select Trust REIT Structure
Sponsor: Wynford Investments Ltd., a portfolio company of Blackstone funds, is the sponsor of Nexus Select Trust.
Manager: Nexus Select Mall Management Pvt. is the manager.
Trustee: Axis Trustee Services Ltd. is the trustee of Nexus Select Trust.
REIT Portfolio
Nexus Select Trust has a portfolio of 17 operational shopping malls in several cities, including Bengaluru, Chennai, Delhi, Hyderabad, Navi Mumbai and Pune, covering an area of 9.8 million square feet. Its portfolio of assets comprises 17 Grade A urban consumption centres with a total leasable area of 9.2 million sq. ft., two hotel assets, and three office assets as of Dec. 31, 2022.
Rental Trends
Nexus Select Trust’s asset marginal rentals have grown at a compound annual growth rate (CAGR) of 7.5% from CY 2016 to CY 2019. Post-COVID-19, Nexus Select Trust’s assets have witnessed robust rental growth of 11.9%, as per information available on its DRHP.
Financials
Its key lease rental growth drivers include contractual rental growth, vacant area lease-up, mark-to-market opportunity, and turnover rent.
The company's net loss narrowed to Rs 10.9 crore in fiscal 2022 in comparison with Rs 199 crore in fiscal 2021, while its revenue from operations rose to Rs 1,318 crore against Rs 906.9 crore.
The company's total debt as of June 30, 2022, stood at Rs 6,172.2 crore.
It has a projected net operating income growth of 26.8% for FY23E-FY25E.
First Retail REIT Offering
The company is expected to be the first publicly listed consumption centre REIT, making it the first REIT retail asset offering in India. The current REITs—Embassy Office Parks REIT, Mindspace Business Parks REIT, and Brookfield India Real Estate Trust—listed on stock exchanges are all backed by office assets.
Risks And Concerns
A decline in footfalls in its urban consumption centres has in the past and may in the future adversely affect its revenues.
A significant portion of the company’s revenues are derived from a limited number of large tenants, any conditions that impact these tenants, properties, or markets may adversely affect its business, according to analysts at ICICI Securities.