Blackstone-backed Nexus files for $500 mn IPO in India's 1st retail REIT public offer

Global investment firm, Blackstone-sponsored Nexus Select Trust, filed the draft paper with market regulator, SEBI, on Thursday, to launch India's first public issue of retail REIT to raise around $500 million, sources said.

Nexus Select Trust has a portfolio of 17 operational shopping malls across 14 major cities, covering about 10 million square feet of area valued around $3 billion.

As per the sources, Nexus Select Trust has filed the Draft Red Herring Prospectus (DRHP) with SEBI and is looking to hit the capital market with India's first retail REIT (Real Estate Investment Trust) public issue in H1 CY23.

The size of the initial public offer (IPO) of Nexus Select Trust REIT will be around $500 million, they added. This will be the third REIT sponsored by Blackstone. It had earlier launched India's first REIT, Embassy Office Parks REIT, and then, Mindspace Business Parks REIT.

The REIT, a popular instrument globally, was introduced in India a few years ago to attract investment in the real estate sector by monetising rent-yielding assets. It helps unlock the massive value of real estate assets and enable participation of retail investors.

At present, there are three listed REITs -- Embassy Office Parks REIT, Mindspace Business Parks REIT, and Brookfield India Real Estate Trust -- on Indian stock exchanges but all these are leased office assets. Nexus Select Trust will be the first REIT with rent-yielding retail real estate assets.

In its portfolio of 10 million square feet of retail real estate, Nexus Select Trust has also included Select Citywalk mall in south Delhi. There are around 3,000 stores in its shopping malls, while the number of brands are approximately 1,000.

The sources said Blackstone is very bullish on the growth story of India's retail sector that has bounced back sharply post the second wave of Covid-19.

"The fundamental of India's retail business is very strong. People are spending money and watching movies," a source said. Unlike the office segment, there are not many players in the shopping mall business and also the supply of Grade A malls is also limited, the sources said.

On the operational front, the occupancy level in the malls currently stands at 94 per cent with an annual footfall of over 130 million, they said.

The sales in its malls during the April-June quarter have been 24 per cent more than the pre-Covid level.

Nexus Select Trust has done leasing of around 3.5 million square feet over the last three years and three months. Its senior management team consisting of nine CXOs (with 20+ years average experience) led by Dalip Sehgal (former executive director of Unilever India) as CEO is supported by over 500 employees.

The board of directors is highly diversified and experienced. The key board members are Michael Holland (ex-CEO of the Embassy REIT), Arjun Sharma (Chairman and Director of the Select Group), Jayesh Merchant (ex-CFO Asian Paints), Sadashiv Rao (Former Director of IDFC), and Tuhin Parikh (Head of BX India Real Estate).

Blackstone has a real estate portfolio of 85 assets, totalling 150 million square feet across office, retail, and logistics segments.

In the office, Blackstone is collectively one of India's largest office landlords (41 assets totalling 101 million square feet), while in logistics and industrial space, Blackstone is one of India's largest warehousing landlords (21 assets totalling 38 million square feet).

Blackstone has recently set up a fully-owned platform 'Lumina' to invest in data centres across Asia, with initial focus on India.

India's first REIT of ₹4,750 crore issue size was listed in April 2019 by Embassy Office Parks, sponsored by Blackstone and realty firm Embassy Group.

In August 2020, K Raheja and Blackstone-sponsored Mindspace Business Parks launched the country's second REIT to raise ₹4,500 crore. Global investment firm, Brookfield has listed the country's third REIT after raising ₹3,800 crore through an IPO.

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