Brookfield REIT IPO listing day strategy: Shares debut tomorrow; should you book profits or go long?

Brookfield India’s Real Estate Investment Trust (REIT) will make its stock market debut on Tuesday, 15 February 2021. The REIT was subscribed 7.94 times by investors during the three-day bidding period earlier this month. Of this, qualified institutional buyers (QIB) bid for 4.78 times their portion while non-institutional investors (NII) had bid for 11.52 times their quota. Seeing the current market sentiment, analysts expect Brookfield India REIT to open at a premium to its issue price of Rs 274-275 per share. This will make it the third REIT to successfully list on Dalal Street, after Embassy Office Parks REIT and Mindspace Business Parks REIT.

Buoyant markets but unlisted space remains tight-lipped

“We expect listing gains to be in the range of 5%-15%,” Yash Gupta – Equity Research Associate, Angel Broking, told Financial Express Online. On the other hand, Vishal Wagh of Bonanza Portfolio expects the current bull market to act as a catalyst for Brookfield REIT, helping the listing price surge. “Current market is very good for listing and IPO. A company with a good balance sheet and growth opportunities can give returns in the range of 25%-30%,” he said.

Also Read: Credit Suisse upgrades Embassy Office Parks REIT, sees upside potential after sharp underperformance

In the unlisted space, Brookfield India REIT is not witnessing any strong movement. Sandip Ginodia, CEO, Abhishek Securities, told Financial Express Online that there were hardly any enquiries about Brookfield REIT in the grey market. Based on this, Ginodia expects marginal listing day gains.

Listing day strategy: Book profits or go long?

Talking strategy, Wagh of Bonanza Portfolio said that seeing the momentum in the market at least half the profits should be booked in IPOs on listing. “At this moment, things are costly. Markets are on shaky grounds and moving in overbought territory. Investors should book profits especially in IPOs,” he added.

Also Read: REITs, InvITs get more attractive; should you invest now? A performance check of listed REITs, InvITs

REITs, unlike equity, are bought by investors not just for the unit price but also for their distribution yields. Angel Broking in its IPO note had said that Brookfield REIT is expected to pay a yield of 7.5% in FY23, something they had termed aggressive and difficult to achieve. Yash Gupta said that investors eyeing long-term gains from distribution yields and capital appreciation can continue to hold Brookfield India REIT post listing while others can exit.

Brookfield India REIT will be the third REIT to trade on the bourses in India but will be the first institutionally managed public commercial real estate vehicle. The Rs 3,800 crore public issue offered investors 75% of the issue to institutional investors and merely 25% to non-institutional investors. Bidding for the issue was to be in a lot size of 200 units and multiples thereafter, translating to a minimum investment of Rs 55,000 per lot. “At the higher price band of Rs 275 per share, Brookfield REIT’s unit is valued at 88.4% of its net asset value (NAV), as compared to peer average of 96.9%,” brokerage firm Choice Broking said in a note. In a low-interest-rate scenario, REITs could be an attractive option for some investors.

(The stock recommendations in this story are by the respective research and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)