Brookfield India REIT to acquire Candor TechSpace N2

Brookfield India Real Estate Trust (NSE:BIRET /BSE: BOM: 543261) (Brookfield India REIT), India's only institutionally managed public commercial real estate vehicle, announced today that it has agreed to purchase 100% stake in Seaview Developers Private Limited ("SDPL Noida") which owns, Candor TechSpace N2, for a total acquisition price of Rs 39.7 billion. It also announced that the acquisition will be financed through a combination of preferential issue of Rs 9.5 billion at a price of Rs 294.25 per unit, and a property level debt issue of Rs 29.1 billion at 6.78% per annum. The preferential issue amounting to Rs 4.95 billion will be allotted to third party investors and Rs 4.55 billion will be allotted to Brookfield Group. The acquisition and the funding are subject to unitholder and regulatory approvals.

Alok Aggarwal, Chief Executive Officer, Brookprop Management Services Private Limited said, "We have a stated strategy of growing our REIT through accretive acquisitions. Candor TechSpace N2 is an irreplaceable property with best-in-class tenancy. The campus is almost complete at a 100% effective economic occupancy. With this acquisition, our operating area increases by 35% to 18.6 msf and the gross asset value increases by 34% to Rs 156 billion. Candor TechSpace N2 is also poised for strong organic growth with contracted escalations, attractive 15% mark-to-market potential and 0.8 msf of on-campus development potential."

Brookfield India REIT will issue the units to Brookfield Group, HDFC Life Insurance, Housing Development Finance Corporation Ltd and State Bank of India via a preferential issue subject to unitholder and stock exchange approvals. The Extraordinary Meeting of unitholders is scheduled for January 14, 2022. Brookfield India REIT has sent a copy of the Extraordinary Meeting Notice to unitholders. Unitholders may also access the Notice at Link.

BofA Securities is serving as financial advisor and placement agent, and SBI Capital Markets Limited is serving as placement agent to Brookfield India REIT. Shardul Amarchand Mangaldas & Co is acting as legal advisor and PricewaterhouseCoopers is acting as financial and tax advisor to Brookfield India REIT. Veritas Legal is acting as legal advisor to Brookfield Group. Kotak Mahindra Capital Co. Ltd provided a fairness opinion to the independent directors of the manager to Brookfield India REIT for the proposed acquisition.

TRANSACTION HIGHLIGHTS

• Acquisition price of Rs 39,663 million is based on the average of the valuations received from the two independent valuers as per REIT Regulations
• The acquisition will significantly increase the scale of Brookfield India REIT with 35% increase in operating area and 34% increase in gross asset value
• Acquisition at 100% effective economic occupancy, backed by an income support from Brookfield Group
• Attractive FY23 cap rate of 7.7% (c.120bps spread to trading cap rate), expected to result in a 3.9% NDCF accretion and an increase in tax free sources of distribution to over 50% (from 33% in Q2FY22)
• The acquisition will accompany a reduction in average borrowing costs of Brookfield India REIT to 6.76% (versus 7.15%)
• Acquisition has been approved by independent directors of the manager and is also supported by a fairness opinion on the Acquisition Price by Kotak Mahindra Capital Co. Ltd

Shares of Brookfield India Real Estate Trust was last trading in BSE at Rs. 292.86 as compared to the previous close of Rs. 294.27. The total number of shares traded during the day was 11809 in over 368 trades.

The stock hit an intraday high of Rs. 295.87 and intraday low of 289.76. The net turnover during the day was Rs. 3454364.00.

Source : Equity Bulls

Keywords

BrookFieldIndiaRealEstateTrust REIT Acquisition BIRET CandorTechSpaceN2