InvestorQ : How does the Mindspace IPO compare with the Embassy REITs IPO of 2019? Would you suggest that I invest in the Mindspace REITs IPO?
swati Bakhda made post

How does the Mindspace IPO compare with the Embassy REITs IPO of 2019? Would you suggest that I invest in the Mindspace REITs IPO?

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Dia Deshpande answered.
12 months ago
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Let us compare the Mindspace REITs IPO with the Embassy IPO on some key parameters. Embassy has a concentration risk in that 55% of its revenues are dependent on Bengaluru city along. Mindspace has spread its bets 38% each between Mumbai and Hyderabad. It is also expanding in Pune and Chennai.

MNC clients tend to be a lot stickier! MNCs accounting for 78% of Embassy client base while Mindspace has MNCs making up 86% of its revenue base. On the positive side, Mindspace has also substantially reduced its dependence on the technology and ITES sector to 44% from 54% a few years back.

That brings us to the returns aspect of investing in the Mindspace IPO. Firstly, the indicative yields are in the range of 7.5% to 8% over the next 3 years. That is a good return considering that dividends will not be taxed. Mindspace could also benefit from scarcity value. It offers an opportunity to spread risk and diversify the equity/bond portfolio.

Then there is the aspect of risk. REITs are more liquid than physical real estate. Since the REITs are obliged to distribute 90% of its distributable surplus every 6 months, investors will be assured of regular returns. There is a word of caution here. REITs must be seen as a long term bet of 5-7 years and you must frame your expectations accordingly.

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