Nexus Select Trust REIT is the owner of India's leading consumption centre platform of high-quality assets that serve as essential consumption infrastructure for India's growing middle class. They expect to be the first publicly listed consumption centre REIT in India upon the listing of the Units on the Stock Exchanges. The Portfolio offers an attractive opportunity to capitalize on India's consumption growth through a robust business model and diversified asset base that can serve as a natural hedge against inflation. REIT's Portfolio comprises 17 best-in-class Grade A urban consumption centres with a total Leasable Area of 9.2 msf, two complementary hotel assets (354 keys) and three office assets (1.3 msf) as of December 31, 2022. The assets are strategically located across 14 leading cities in India, which constituted 30% of India's total discretionary retail spending in FY20 and had an average population CAGR that was 226 bps higher than the national average from financial years 2011 to 2021. The quality, scale and reach of the pan-India Portfolio, their superior shopping experience and holistic retail offering have enabled them to achieve a market-leading position, which makes most of the Portfolio assets destinations of choice for leading brands that are looking to expand in India. A majority of the Portfolio assets are market leaders in their respective submarkets and serve as shopping, entertainment and social destinations for their respective catchments. As a result, they enjoyed a 96.2% average Committed Occupancy across the Portfolio as of December 31, 2022, a 11.0% CAGR in tenant sales from FY18 to FY201, and a 7.5% CAGR in Marginal Rents across the Portfolio from CY16 to CY19 (122 bps higher than the average Marginal Rents for the Portfolio Markets). REIT'S Portfolio has a tenant base of 1,044 domestic and international brands with 2,893 stores as of December 31, 2022 and is well diversified across cities with no single asset and tenant contributing more than 18.3% and 2.8% of the total Gross Rentals for the month of December 31, 2022, respectively. They have curated a healthy mix of tenants across sectors such as apparel and accessories, hypermarket, entertainment, and food and beverages ('F&B') in order to provide a holistic shopping and entertainment offering to consumers. The diversified exposure and industry-leading asset management capabilities have conferred significant resilience to the Portfolio, 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. As of December 31, 2022, 95.5% of the tenant leases provide for Minimum Guaranteed Rentals with typical contractual rent escalations of 12% to 15% over a period of three to five years, and 88.3% of the leases contained Turnover Rental arrangements which allow them to capitalize upon growth in tenant sales driven by increased consumption. Over the last three financial years and nine months, they have been able to recover more than 80% of the operating and maintenance expenses from the tenants, while incurring significantly lower amounts of tenant improvement capital expenditure (as a proportion of the total NOI) as compared to consumption centres in the United States.As of July 31, 2022, they had a fleet of 739 specially fabricated armoured vans through a combination of leased vehicles, short term contractual basis and own vehicles. As of July 31, 2022, they own 739 fabricated armoured vans. This allows them to service clients across the length and breadth of the nation along with the support of a team consisting of 8,780 persons, including employees and contractual workers. As per financial performance, Nexus Select Trust REIT has posted total income/net profits of Rs 1,708.18 Cr / Rs 206.73 Cr (FY20), Rs 1,047.97 Cr / Rs (199.11) Cr (FY21) and Rs 1,998.51 Cr / Rs (10.95) Cr (FY22) and Rs 1,498.35 Cr / Rs 257.02 Cr (upto Q3 FY23). So as per financial data, company has posted losses, but it was effect of pandemic and now they are able cross pre-pandemic level. As per RHP, there are no listed peers. On BRLM's front, 10 lead managers are associated with this IPO, and have handled around 101 IPOs in last three fiscals.BofA Securities India Limited : This is 36th IPO from this BRLM. From last 10 IPOs, 3 opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 IPOs, 6 is trading below issue price and other are trading above issue price. ( As on 25.03.23 ) Axis Capital Limited : This is 36th IPO from this BRLM. From last 10 IPOs, 3 opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 IPOs, 6 is trading below issue price and other are trading above issue price. ( As on 25.03.23 ) Citigroup Global Markets India Private Limited : This is 36th IPO from this BRLM. From last 10 IPOs, 3 opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 IPOs, 6 is trading below issue price and other are trading above issue price. ( As on 25.03.23 ) HSBC Securities and Capital Markets (India) Private Limited Private Limited : This is 36th IPO from this BRLM. From last 10 IPOs, 3 opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 IPOs, 6 is trading below issue price and other are trading above issue price. ( As on 25.03.23 ) IIFL Securities Limited : This is 36th IPO from this BRLM. From last 10 IPOs, 3 opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 IPOs, 6 is trading below issue price and other are trading above issue price. ( As on 25.03.23 ) JM Financial Limited : This is 36th IPO from this BRLM. From last 10 IPOs, 3 opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 IPOs, 6 is trading below issue price and other are trading above issue price. ( As on 25.03.23 ) J.P. Morgan India Private Limited : This is 36th IPO from this BRLM. From last 10 IPOs, 3 opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 IPOs, 6 is trading below issue price and other are trading above issue price. ( As on 25.03.23 ) Kotak Mahindra Capital Company Limited : This is 36th IPO from this BRLM. From last 10 IPOs, 3 opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 IPOs, 6 is trading below issue price and other are trading above issue price. ( As on 25.03.23 ) Morgan Stanley India Company Private Limited : This is 36th IPO from this BRLM. From last 10 IPOs, 3 opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 IPOs, 6 is trading below issue price and other are trading above issue price. ( As on 25.03.23 ) SBI Capital Markets Limited : This is 36th IPO from this BRLM. From last 10 IPOs, 3 opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 IPOs, 6 is trading below issue price and other are trading above issue price. ( As on 25.03.23 ) As per financials, Nexus Select Trust REIT has shown muted results due to pandemic effect and now upto Q3 FY23 has crosses pre-pandemic net profit level. It is also expected, we may see good growth in retail consumption post pandemic. This REIT will also have first mover advantage. So, we give SUBSCRIBE rating for this REIT and one may invest with medium to long-term view and steady cash-flows as per distribution policy.
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