About the Company:

The business is a Real Estate Investment Trust (REIT) in India, and it is set to become the first publicly listed consumption center (malls) REIT in the country. The company owns a diverse portfolio of consumption centers, including malls, hotels, and office spaces. It is India's leading consumption center platform, with high-quality assets that serve as essential consumption infrastructure for the growing middle class in the country.
The REIT portfolio comprises 17 Grade A urban malls, two complementary hotel assets (354 rooms), and three office assets (1.3 msf Million square feet), strategically located across 14 leading cities in India. These 14 cities had constituted 30% of India's total discretionary retail spending in FY20. The malls segment has a total leasable area of 9.2 million square feet and a tenant base of 1,044 domestic and international brands, with 2,893 stores as of December 31, 2022.
The tenant portfolio has been carefully curated to include a healthy mix of tenants across sectors such as apparel and accessories, hypermarkets, entertainment, and food and beverages to provide a holistic shopping and entertainment experience to consumers. The tenant portfolio includes the names like Lifestyle, Cinepolis, PVR, Westside, Zara, Shoppers Stop, Max, Smart Bazar, Reliance Trends, Swedish Apparel Retailer chain.
The tenant base is well diversified across cities, with no single asset or tenant contributing more than 18.3% and 2.8% of total gross rentals for the month of December 31, 2022, respectively.
The company has been able to achieve a 7.5% CAGR in marginal rents across the portfolio from CY16 to CY19. The pie chart below shows us which segments of the tenants are contributing to their rental income.

Below table highlights the key statistics of the REITs related to its properties.

Despite the challenges posed by the COVID-19 pandemic, the company has been able to recover well, with tenant sales in the three months ended December 31, 2022, recovering to 128.1% of pre-COVID-19 levels, as measured in the three months ended December 31, 2019.

Industry outlook - REITs In India:
Currently, there are three listed REITs in the Indian market, all of which are office REITs. As such, there is currently no listed retail REIT in India. Indian REITs have significantly outperformed its global peers, delivering an IRR of 13.4% since April 2019, outperforming US office REITs by 2,662 bps.

Industry outlook - India Retail Real Estate:
India has one of the lowest per capita stocks of Grade-A UCCs (Urban Consumption Center) amongst major economies at 0.04 sf per capita as compared to 24.03 sf for US and 12.49 sf for UK (as of December 2021).

Key risks factors for the company:
1) The title and development rights or other interests over land where assets in the Portfolio are located, and/or rights and interests in Asset SPVs may be subject to legal uncertainties and defects.
2) The valuation reports obtained for Portfolio are based on various assumptions and may not be indicative of the true value of assets.
3) Tenant leases across portfolio are subject to the risk of non-renewal, non-replacement, default, early termination, regulatory or legal proceedings or changes in applicable laws or regulations, thereby impacting leasing and other income.
4) Company has a limited operating history and may not be able to operate business successfully, achieve business objectives or generate sufficient cash flows to make or sustain distributions.

Finances:

There is degrowth in Revenue and Total assets post Mar 2020 and company has suffered net losses in 2 out of last 3 years.

Objective of the offer:
The Offer comprises of a Fresh Issue and an Offer for Sale.
The Nexus Select Trust will not receive any proceeds from the Offer for Sale. The Net Proceeds from the Fresh Issue will be utilised towards the following objects:
1) Partial or full repayment or prepayment and redemption of certain financial indebtedness of the Asset SPVs and the Investment Entity;
2) Acquisition of stake and redemption of debt securities in certain Asset SPVs; and General purposes

Comparison with Industry peers:
The Nexus Select Trust does not have any listed industry peer as on date of this Offer Document as there are no listed real estate investment trusts in the retail sector in India. Comparing to other listed office REITs would not be very helpful for our understanding.

Details of the offer:
The IPO started on 9^th May 2023 and will end on 11^th May 2023 with an issue size of Rs. 3200 Cr (Offer for Sale 1800 Cr and Fresh Issue 1400 Cr). The lot size will be 150 shares and a retail investor can apply for a maximum of 13 lots. The price band offered by the company is Rs. 95 - 100 per share. As at the time of writing of this blog the Grey Market Price is Rs. 102.5, making the GMP 2.5%.