Bagmane Prime Office REIT
IPO Size: Rs. 3,405 cr (Rs. 2,555 cr excluding Rs. 850 cr strategic investor portion)
- Fresh Issue of Rs. 2,390 cr, for acquisition of assets from Bagmane Group
- Offer for Sale (OFS) of Rs. 1,015 cr by the minority investor Blackstone, partial exiting 1.5 year old investment (unlike Embassy & KRT, Blackstone is not a sponsor in Bagmane)
Price band: Rs. 95-100 per unit (not share)
- 75% allocation of net issue for institutional investors and 25% for HNI and retail
Post Money M cap: Rs. 34,000 cr
IPO Date: Tue 5th May to Thu 7th May 2026, Listing Fri 15th May 2026
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Bengaluru based Office REIT
Bagmane Prime Office (Bagmane REIT), sponsored by Bagmane Group, comprises 6 commercial properties with 19.6 msf of leasable area and 98.8% committed occupancy. This is split between 16.6 million square feet (msf) of completed area, 1 msf under-construction and 2 msf of future development, comprising 2 upcoming hotels (607 keys) and 164 MW solar projects. Gross asset value is at Rs. 40,263 cr, with low leverage of Rs. 3,017 cr, as of 31.12.25. REIT also has a ROFO (right of first offer) pipeline of 47 msf in Bengaluru, Delhi and Chennai.
REIT is More Debt-like
REIT is a preferred option over buying physical property. As a financial instrument, it falls in between debt and equity, as returns are not guaranteed (like debt), not as high (as equity), but more regular. Having said that, REITs score over InvIT for their less volatility and actual return track record has been better. Also, REITs allocation is from one’s debt portfolio and not equity.
Post-Tax Yield higher than Bank Fixed Deposit, but lower than Nifty
Based on FY27E net distributable cash flow (NDCF) of Rs. 2,096 cr, distribution per unit (DPU) is projected at Rs. 6.16 for the current year, on 340 cr units, yielding 6.3%, based on quarterly pay-outs.
DPU comprises dividend and interest component (no shareholder loan repayment) split roughly 70:30. While dividend is tax-free in unit holders’ hand (SPVs fall under old tax regime), interest component is taxable in unitholder’s hands at marginal slab rates. Thus, post-tax return for FY27E is around 5.6%, assuming income of Rs. 1 cr+ for individual tax payer.
While Bagmane REIT’s 6.3% yield is lower than 6.4% to 6.7% interest on 1-2 year fixed deposit offered by leading private banks like HDFC, ICICI, Axis, Kotak, the post-tax return of 5.6% is better than post-tax return of ~4.2% on bank FDs.
For FY28E, Bagmane’s NDCF is projected at Rs. 2,185 cr implying DPU of Rs. 6.43, or post-tax yield of 5.9%. While this is better than bank FD, it is much lower than 11% post tax return on long term Nifty.
At a discount to NAV, similar to peers
At Rs. 100 per unit, issue is made at 9% discount to NAV (net asset value) of Rs. 109.13, as of 31.12.25. The 4 listed office REITs Embassy, KRT, Mindspace, Brookfield, are ruling at 2-7% discount, making NAV based valuation inline.
Capital Appreciation
Besides quarterly payouts, REIT unit holders can earn capital gains on sale of units, due to change in value of assets held by the REIT. This is a mix of regular 3-5% annual rent escalation and growth through new properties to be acquired by the REIT.
However, this capital appreciation is also influenced by macro interest rate. Declining interest rate scenario is supportive of REIT price appreciation and vice versa. Given global uncertainties, interest rate cut is unlikely in India going forward, limiting the appreciation.
