Mindspace Business Parks REIT, which is aiming to become the country’s second publicly listed real estate investment trust (REIT), plans to refinance a large portion of its rent-yielding portfolio’s debt after its initial public offering (IPO), shows the company’s filing with the markets regulator.
According to Mindspace REIT’s draft IPO prospectus filed with Sebi, the company is aiming to raise around ₹3,700 crore of debt, which will be used to refinance part of its existing debt of its asset portfolio.
“After completion of the offer, we may enter into financing arrangements in accordance with applicable law by raising external debt to refinance a portion of the existing debt of the asset SPVs through repayment of existing loans,” the company said in its draft prospectus.
The term sheets for the REIT financing is proposed to be entered into prior to filing the offer document with Sebi and the definitive documentation for availing the REIT financing will be executed after the completion of this offer and the listing of the units, the company said.
Mindspace REIT filed its draft IPO prospectus on 31 December. The IPO will see the REIT raise ₹1,000 crore through a fresh issue of shares, while existing shareholders, K. Raheja Corp. and Blackstone, will offload a part of their shareholding through an offer for sale.
The REIT will use the IPO proceeds for partial or full prepayment, or scheduled repayment, of certain debt facilities of the assets held by it. The quantum of the offer for sale by the existing shareholders has not been decided.
Mindspace REIT has outstanding debt of ₹6,900 crore as on 30 September, the prospectus shows.
The proposed debt financing is planned in three tranches of ₹700 crore, ₹1,600 crore and ₹1,400 crore, with expected repayment maturities ranging from two to five years.
Mindspace REIT has a portfolio of commercial properties with a total leasable area of 29.5 million sq. ft (msf), comprising 19.8 msf of completed area, 6.1 msf of under-construction area and 3.6 msf of future development area, as on 30 June 2019.
The portfolio includes five integrated business parks with amenities (such as restaurants, crèches and outdoor sports arenas) and five independent offices.
These properties are located in four key office markets—Mumbai Region, Hyderabad, Pune and Chennai. Mumbai comprises the biggest chunk of the portfolio with 12.1 msf of leasable real estate, followed by Hyderabad with 11.6 msf.