Five years since listing, Mindspace REIT looks to cash in on leasing growth, new developments

In an interaction with Moneycontrol, Nair said that the REIT has been planning to increase its NOI by upto Rs 1,000 crore

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26 Aug, 2025 12:21

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Mindspace Business Parks REIT, the second real estate investment trust to list in India after Embassy Office Parks REIT, hit the public markets at a time when people were largely working from home during the COVID-19 pandemic.

The K Raheja Corp-backed trust listed in August 2020, when pan-India office leasing hit its lowest level in recent years to around 27 million square feet (msf), and even its listing ceremony was low-key and virtual.

A little more than five years on, prospects have changed dramatically. Gross office leasing is expected to hit a new high of more than 90 msf, and more REITs have hit the market, including Knowledge Realty Trust, the largest in India, sponsored by Blackstone and Sattva. Blackstone was an investor in Mindspace REIT as well, till they sold their stake to the Abu Dhabi Investment Authority.

Mindspace REIT's own fortunes have also improved, with marquee domestic and overseas investors onboarded, and its net asset value has reached to around Rs 43,400 crore. Its net operating income has grown incrementally, from Rs 1,374 crore in FY21, to Rs 2,062 crore in FY25, and has distributed more than Rs 5,500 crore to investors since listing, placing its annualised returns at around 14.8 percent.

Like others in the commercial real estate market, Mindspace REIT has been a major beneficiary of the wave of global capability centres (GCCs) — set up by multinational firms for strategic functions. Across its developments in Hyderabad, Mumbai, and Pune, the REIT is host to a number of major manufacturing and technology players, said Ramesh Nair, managing director and CEO of Mindspace REIT, in an interaction with Moneycontrol, at an event marking five years since the REIT listed on public markets.

Since listing, the REIT's unit price has risen steadily, increasing by around 39 percent over five years, although vastly trailing the benchmark Nifty 50 index over the same time, which more than doubled.

And while Mindspace REIT's investor base has widened to include more retail and non-institutional investors, REITs as a whole remain a largely institutional product. Nair, however, thinks that professionals looking to save up for retirement should actively consider REITs, given stable returns, and a vast, untapped opportunity.

"100 percent," Nair said, during the interaction, "That is the future. No REIT promises 25-30 percent returns, with a typical REIT investment providing around 13-14 percent by way of returns. In the last five years, our returns have been nearly 15 percent, which is fantastic inspite of all that happened globally, including COVID and work-from-home. It is a very steady return. In the US, REITs are a $2 trillion asset class, versus $18 billion in India. That is the opportunity in front of us".

Growth plans

Mindspace REIT has a net leasable area of 38.1 msf, centred around its key markets of Mumbai, Hyderabad, and Pune, as well as an emerging portfolio in Chennai. In these markets, the REIT has mainly added assets built by its sponsors, K Raheja Corp, but has also carried out third party acquisitions, with the first one being the Q-City in Hyderabad, a 810,000 square feet property for Rs 512 crore.

Beyond offices, the REIT has commissioned two out of five planned data centres, which will be operated by Warburg Pincus-backed PDG. It is also starting to add hotels to its portfolio, largely attached to their offices, partnering with operators such as Hyatt.

For under-construction assets, the REIT plans to spend around Rs 4,250 crore in the near-to-mid term to add around 3.7 msf of space. Nair said that the REIT has a visibility of adding around Rs 900-1,000 crore in terms of net operating income over the next three to four years, based on upcoming completions, future development, escalation in rentals, and leasing vacant space.

The REIT has also been keen to take the redevelopment route, especially in Hyderabad and at Airoli, Navi Mumbai, to take advantage of new building regulations to maximise space. In a presentation, the REIT outlined a further 3.4 msf of future development across its land parcels, with the management also indicating "opportunistic" third-party acquisitions.

Debt has been the REIT's preferred way to raise capital, including sustainability-linked bonds, through which it raised around Rs 1,200 crore from International Finance Corporation, part of the World Bank Group, with the management noting that the REIT has enough financial headroom to fund its pipeline of assets.

"We have enough debt capacity. Our loan-to-value is around 26 percent today, and we can go all the way to 49 percent, but around 35 percent will be the watertight limit for us. Even with Rs 4,000 crore of capex, I don't think we are anywhere close to the comfort levels that we have for ourselves. We want to move to bond issuances to raise debt...we want to get to around 75 percent at the REIT level through bonds. If we need to, we can do a QIP or follow-on offer, but there is no plan to raise equity as of now," said Preeti Chheda, chief financial officer of Mindspace REIT.

Nair, a veteran of the commercial real estate segment, whose previous professional stints were in leadership roles at the property consultants Colliers and JLL, said that supply has largely kept pace with demand, despite industry concerns about the relative lack of supply in Grade-A offices.

"Supply and demand have been keeping pace. Between 2019 to 2023, the average supply was 48 msf, and from 2024 to 2026, it is around 54 msf, which is exactly the demand in terms of net absorption," said Nair.