Mindspace REIT Announces Results for Q3 FY2022

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Uptick in office leasing continues, c.3.8 msf leased in the first 9 months of FY22 

Pre-leased an entire upcoming building of c.0.7msf at Commerzone Kharadi, Pune 

Declared distribution of INR 4.64 per unit

Mumbai, February 12, 2022: Mindspace Business Parks REIT (BSE: 543217 | NSE: MINDSPACE) (‘Mindspace REIT’), owner and developer of quality Grade A office portfolio located in four key office markets of India, reported results for the quarter and nine months ended December 31, 2021.

Performance Update 

  • Gross leasing remained robust at c.1.8 msf in Q3 FY22
  • Achieved an average rent of INR 64 psf/month, signed across 26 deals
  • Pre-leased an entire upcoming building of c.0.7msf at Commerzone Kharadi to a marquee tenant
  • Re-leasing spread stood at 27.8% on 0.8 msf of area re-let
  • Continued to collect more than 99% of Gross Contracted Rentals 
  • Committed Occupancy and Same Store Committed Occupancy at 84.6% / 84.7% respectively

Financial Update 

  • Reported Net Operating Income of INR 3,715 Mn, up by 3.8% on Y-o-Y basis and 3.4% Q-o-Q
  • Declared distributions of INR 2,752 Mn / INR 4.64 p.u., with over 90% being tax-exempt  
  • Annualised distribution yield of c.6.7% on issue price 
  • Average cost of debt further reduced by c.20 bps Q-o-Q to 6.7% as on December 31, 2021
  • Post the quarter end, raised INR 5 Bn through issuance of debentures at 6.35% p.a. coupon, further reducing the pro forma cost of debt to 6.6% p.a.
  • Strong balance sheet with low Loan-to-value (LTV) of c.15.8%
Receipt of notice of intention 
  • Received ROFO notice from Sustain Properties Private Limited (“Sustain”) and its shareholders expressing their interest to offer all the outstanding equity shares held by the shareholders in Sustain to Mindspace REIT. Sustain houses Commerzone Madhapur, Hyderabad which is a partly complete and fully pre-let c.1.8 msf  asset located in one of the prime business districts of Hyderabad. The Manager shall evaluate the opportunity.

Distribution

  • The Governing Board of K Raheja Corp Investment Managers LLP, Manager to Mindspace REIT approved a distribution of INR 2,752 Mn or INR 4.64 p.u. for Q3 FY2022 at its meeting held earlier today. Dividend, which is tax-exempt in the hand of unitholders, forms c. 93% (INR 4.31 p.u.) portion of distribution while interest constitutes the remaining c. 6.9% (INR 0.32 p.u.) and other income of c.0.2% (INR 0.01 p.u.). The record date for the distribution is February 16, 2022, payment of the distribution shall be processed on or before February 25, 2022. 
Other Updates
  • ‘Sword of Honour’ awards received across 5 business parks from British Safety Council
  • One of the buildings at Mindspace Madhapur, Hyderabad has won ‘Best Commercial Development Award‘ at the CREDAI’s – CREATE Awards 2021
  • Facilitated over 1 lakh vaccination for our tenants, employees, and construction workers as on December 31, 2021  

Speaking on the results, Mr. Vinod Rohira, Chief Executive Officer, said, “Mindspace Business Park REIT witnessed a significant uptick of leasing activity with c.1.8 msf of space leased in the December quarter, taking the overall leasing to c.3.8 msf the first 9 months of FY22. The significant change in occupiers’ preference towards quality office spaces which adhere to the best standards of health, safety, experience, and wellness protocols has helped increase demand for our portfolio. We expect this trend to accentuate further in the coming quarters. The Union Budget’s impetus of replacing the SEZ policy to improve ‘Ease of doing business’ in SEZs would provide fillip to the demand for SEZ spaces in our Portfolio.”