Nexus Select Trust REIT IPO: Blackstone-backed Nexus Select Trust REIT’s Rs 3,200 crore IPO opened for subscription on 9 May. The issue’s price band has been set at Rs 95-100 per unit. The public offering comprises a fresh issue of units up to Rs 1,400 crore and an offer for sale (OFS) component with unitholders offloading units up to Rs 1,800 crore. The issue size was earlier proposed to be Rs 4,000 crore.
Not more than 75% of the offer is allocated for institutional investors and 25% of the IPO is reserved for non-institutional investors. Additionally, the manager may allocate up to 60% of the Institutional Investor portion to anchor investors on a discretionary basis. For REIT IPOs, NIIs are those who purchase units worth up to Rs 5 lakh in the trust. The IPO will close for subscription on 11 May, Thursday. The date of allotment of units is projected to be 17 May, Wednesday, following which, the issue is expected to list on the bourses on 19 May. Nexus Select Trust raised Rs 1,440 crore from anchor investors on 8 May as the anchor book opened and closed for subscription yesterday.
Should you apply for the Nexus Select Trust REIT IPO?
Geojit Financial Services: Subscribe long-term
The NST’s portfolio is highly stabilized, with a committed occupancy of 96.2% and 5.7-year WALE (weighted average lease expiry) as of December 31, 2022. Their portfolio has a tenant base of 1,044 domestic and international brands with 2,893 stores as of 9MFY23. The LTV (Loan to Value) is expected to reduce ~20% as a part of the net IPO proceeds will be utilized for debt reduction. This provides flexible headroom for future acquisitions. NST has acquired 17 malls in the last 7 years and aims to double acquisitions going forward. Considering the strong growth story in consumption space, healthy projected net operating income (NOI) growth of ~17% over FY24-26E, capital appreciation prospects, and healthy balance sheet with lower LTV ratio, we assign a “Subscribe” rating on a long term basis.
ICICIdirect: Subscribe
Nexus Select is a quasi-play on consumption through its high-quality retail assets. At the upper band of Rs 100/unit (the market cap of Rs 15,150 crore), the issue is at Price/NAV of 0.78x (December, 2022 NAV at Rs 127.7/unit). We assign SUBSCRIBE rating on the back of a) healthy yield potential, b) organic growth opportunities on rent escalation/repricing/releasing and tenant sales and c) potential inorganic growth through assets addition.
Choice Broking: Subscribe
Nexus has expanded significantly in the last three fiscal years and is well-positioned to report continued growth in the future by expanding the tenant base and taking advantage of market opportunities. According to the management, following the utilization of the net proceeds, its leverage will be in a comfortable position, thereby providing it with flexibility to pursue value-accretive acquisitions in the future. Thus we assign a “SUBSCRIBE” rating for the issue.