About Mindspace

Mindspace Business Parks REIT has a quality office portfolio in Mumbai, Hyderabad, Pune and Chennai. The business parks in Mumbai are Mindspace Airoli East Business Park, Mindspace Airoli West Business Park, Paradigm Mindspace Malad and The Square, BKC(2).

The properties in the Pune include Commerzone Yerwada Business Park, Gera Commerzone Kharadi Business Park and The Square, Nagar Road. The Chennai property of the company is Commerzone Porur. And, the office parks in Hydrabad are Commerzone Pocharam and Mindspace Madhapur.

The total leasable area of Mindspace Business Parks are 12.1 msf, 11.6 msf, 5.0 msf and 0.8 msf in Mumbai, Hyderabad, Pune and Chennai, respectively. With total leasable area of 29.5 msf, it is one of the largest Grade-A office portfolios in India.

The under-construction area of the company is 2.8 m sq ft. The future construction of Mindspace Business is spread across Hyderabad, Chennai, and Mumbai in a 3.6 m sq ft area.

Property Portfolio

Real Estate Investment Trust (REIT) Explained

Under the REIT Regulations Mindspace REIT has to invest a minimum of 80% of the value of its assets in completed and rent and/ or income-generating properties.

REIT Regulations also impose restrictions on certain investments including investments in vacant land, agricultural land, or mortgages other than mortgage-backed securities and assets located outside India.

As per REIT Regulations, the portfolio of the Mindspace REIT is required to be maintained for a period of minimum 3-years from the date of purchase or completion.


Cape Trading LLP and Anbee Constructions LLP are the promoters of the company.

Objects of Issue

The proceeds will be utilised towards the following objects:

1. Partial or full pre-payment or scheduled repayment of certain debt facilities of the Asset SPVs availed from banks/financial institutions (including any accrued interest and any applicable penalties/ premium); (Rs 9000 mn)

2. Purchase of NCRPS of MBPPL; and (Rs 334 mn)

3. General purposes

Issue Details

Opens July 27, 2020 and Closes July 29, 2020.

The price per unit is Rs 274-275

Minimum Lot is 200 Shares.

75% of the net offer is reserved for institutional investors and the rest 25% for non-institutional investors.

Issue Size is Rs 4500 Cr. (This  includes allotment to strategic investors of Rs.1125 cr. Hence net offer is Rs.3375 cr)

Post issue, Mindspace REITs will have 5,938,018,182 units that indicate market cap of Rs. 16308 cr. based on the upper price band of the units.

574 cr was the Net Distributable Cash Flow (NDCF) for H2FY21. Annualizing it to Rs 1150 Cr, and then dividing it by the market cap post listing, the current REIT yield comes to be 7.05%.

FY22E NDCF is 1223 Cr which brings the yield to 7.5%.

Proposed Mindspace REIT Structure (Portfolio Assets):

What is a Real Estate Investment Trust?

REITs, or real estate investment trusts, are companies that own or finance income-producing real estate in a range of property sectors. Modelled like mutual funds, REITs provide all investors the chance to own valuable real estate, present the opportunity to access dividendbased income and total returns, and help communities grow, thrive and revitalize.

The stockholders of a REIT earn a share of the income produced through real estate investment – without actually having to go out and buy, manage, or finance a property. Most REITs operate along with a straightforward and easily understandable business model: By leasing space and collecting rent on its real estate, the company generates income which is then paid out to shareholders in the form of dividends. REITs must payout at least 90% of their net distributable cash flows.


Over the last two decades, India has emerged as a leading hub for technology and corporate services due to its favorable demographics, large talent pool and competitive cost advantage in providing high value-added services.

This has led to an increased demand for quality office space from multinational as well as large domestic corporations. Mindspace’s portfolio is located in Mumbai Region, Hyderabad, Pune, and Chennai (“Portfolio Markets”), which are amongst the key office markets of India and accounted for approximately 58.0% of total Grade-A net absorption in the top six markets in India, namely, Chennai, Mumbai Region, Pune, Hyderabad, Bengaluru and the National Capital Region (“Top Six Indian Markets”) during the fiscal year 2020 (Source: C&W Report).

The Portfolio Markets have exhibited strong market dynamics with net absorption exceeding supply, resulting in low vacancy and rental growth between 2014 and Q1 2020 (Source: C&W Report). Their assets are located in the established micro-markets of their respective Portfolio Markets, with proximity and/or connectivity to major business, social, and transportation infrastructure. They have established a significant presence in relevant Portfolio Markets. For instance, Mindspace Madhapur and Mindspace Airoli East are the largest business parks in their respective Portfolio Markets (Source: C&W Report).

Current Expansions


As of March 31, 2020, their Portfolio is well diversified with 172 tenants and no single tenant contributing more than 7.7% of its Gross Contracted Rentals. Furthermore, as of March 31, 2020, approximately 84.9% of Gross Contracted Rentals were derived from leading multinational corporations and approximately 39.4% from Fortune 500 companies. Their tenant base comprises a mix of multinational and Indian corporates, including affiliates of Accenture, Qualcomm, BA Continuum, JP Morgan, Amazon, Schlumberger, UBS, Capgemini, Facebook, Barclays and BNY Mellon, as of March 31, 2020.

The tenant base is well-diversified, with top 10 tenants contributing 41.6% of Gross Contracted Rentals, as of March 31, 2020, as set out below: 

The Portfolio is stabilized with 92.0% Committed Occupancy and a WALE of 5.8 years, as of March 31, 2020, which provides long-term visibility to revenues. Their focus on offering a comprehensive ecosystem through optimal density and well-amenitized parks to tenants that provide high value-added services has enabled assets to outperform in their respective micro-markets. For example, at Mindspace Airoli East and Mindspace Airoli West properties, they have achieved average power cost savings (approximately between ₹ 3.0 and ₹ 6.0 psf per month for the fiscal year 2020) for tenants through the in-house distribution of power. Committed Occupancy is 240 bps higher than average occupancy in Portfolio Markets, as of March 31, 2020, while rental growth has been approximately 320 bps higher for the last three fiscal years (Source: C&W Report).

Interesting Aspect of business

Leases in India are typically on a “warm shell” basis, resulting in landlords incurring limited tenant improvement capex. Tenants in India typically incur tenant improvement capex between ₹ 2,000 to ₹ 6,000 psf for fitting out the premises according to the nature of business activity and office location unlike other developed markets where landlords spend a significant amount of tenant improvement capex to attract and retain tenants. (Source: C&W Report)

Since Mindspace tenants typically undertake significant tenant improvement CAPEX at their own expense, they have higher “stickiness” due to high relocation costs.

Stable cash flows with contracted occupancy and escalations

The tenure of their leases is typically five to ten years, with an initial commitment of generally three to five years and renewal options post initial commitment period. While the majority of leases have rental escalations of 12.0% to 15.0% every three years, they have recently started leasing with rental escalations between 4.0% to 5.0% every year. In addition, they expect rent commencement from leased out space which is contracted, as of March 31, 2020, and has not generated rental income for the full year during the fiscal year 2020, to contribute to the growth of Portfolio. Over the Projections Period, Contracted & Others are expected to contribute approximately ₹ 2,917 million, or 40.2%, of the total increase in net operating income (“NOI”).

As of March 31, 2020, their Portfolio has 92.0% Committed Occupancy. The vacancy of 8.0% is concentrated in three assets, Mindspace Airoli West, Gera Commerzone Kharadi, and Mindspace Madhapur, which respectively comprise 51.9%, 19.9%, and 12.8% of the total vacancy, as of March 31, 2020. The vacant space is primarily concentrated in large blocks of contiguous space on an individual or multiple floors, which they believe could be attractive to larger tenants. Over the Projections Period, the lease-up of existing vacancies is expected to contribute ₹ 1,544 million.

Covid Impact

As of May 31, 2020, Committed Occupancy of the Portfolio was 92.4% and In-place Rent across Portfolio was ₹ 52.5 psf. They derive 99.4% of Gross Contracted Rentals from leasing of office premises, and have not seen a significant decline in the rent receipts during these two months (collected 97.8% and 95.2% of Gross Contracted Rentals for the months of April and May 2020, respectively).

While the COVID-19 pandemic has affected the majority of the industries, the industries that are being severely impacted by this pandemic include aviation, education, entertainment and events, food and beverage, co-working, and hospitality (Source: C&W Report). During the months of March, April and May 2020, 1.0% of Gross Contracted Rentals were attributable to these industries

Since April 1, 2020, they have leased 0.7 msf of area (of which 40.5% was leased to their existing tenants and 59.5% was leased to new tenants) including pre-committed 42,567 sf of an area in their under-construction asset, Commerzone Porur. Also, they have not availed any deferments or moratoriums with respect to any of its financial commitments

Battling Covid

In response to the pandemic and in order to promote the health and safety of tenants and visitors to their properties, they have implemented various measures including restricting access and status check from the Aarogya Setu App, screening with thermal cameras and infrared thermometers, social distancing, disinfection of common areas and touchpoints, sanitization and hand wash stations, ambulance on standby, signage, and helpdesks to provide information on protocols to be followed in buildings, and isolation rooms to isolate employees with symptoms of COVID-19.

It has also undertaken infrastructure initiatives for surface disinfection and hygiene initiatives such as vehicle disinfection, auto dispenser, and biomedical waste disposal. Further, they are in the process of evaluating and implementing additional measures, such as upgrading the air conditioning system including ultraviolet germicidal irradiation lights in the air handling unit to further enhance the air quality and ultraviolet surface disinfection in our properties.

They have also equipped maintenance staff with personal protective equipment and trained them in COVID-19 safety protocols. They are constantly working towards solutions that could further strengthen its COVID-19 containment measures and provide stakeholders at properties with a safe working environment.


Its Portfolio comprises five integrated business parks and five quality independent offices, totaling 29.5 msf of Total Leasable Area, comprising 23.0 msf of Completed Area (of which 3.3 msf was achieved in the fiscal year 2020), 2.8 msf of Under Construction Area and 3.6 msf of Future Development Area, as of March 31, 2020.

Their park infrastructure, amenities, environment-friendly initiatives, and active asset management enable tenants to provide their employees with a safe and efficient working environment. This has resulted in Committed Occupancy of 92.0%, Same Store Committed Occupancy (that represents Committed Occupancy for the Portfolio for areas where occupancy certificate was received on or before March 31, 2019) of 96.5%, and growth of InPlace Rent across Portfolio to ₹ 51.8 psf, as of March 31, 2020.

In addition, over the last five fiscal years, they have added 7.5 msf of area, of which 3.3 msf was added in the fiscal year 2020, which includes 1.2 msf in Mindspace Madhapur, 1.3 msf in Gera Commerzone Kharadi, 0.7 msf in Mindspace Airoli East and Mindspace Airoli West and 0.1 msf of The Square, BKC.

They also provide core office-building infrastructure that includes dual source power supply with 24×7 power back up, building management systems, fire-fighting, and security mechanisms and landscaped surroundings. The building amenities are designed to cater to the needs of tenants and their employees and include food plazas, restaurants, crèches and several health and recreation facilities such as cafes, clubhouses, amphitheaters, gyms, outdoor sports arenas, recreational gardens, and ambulance service.

Biggest Tailwinds for this sector – Indian Services Sector

India’s services sector continues to be the key driver of India’s growth and represented 54.3% of India’s gross value added (“GVA”) during fiscal year 2019. Within the services sector, the technology industry has been the major growth driver. According to C&W Report, this growth in technology services is driven by:

Large English-Speaking Talent Pool: India has the second largest English-speaking population in the world and a large talent pool of highly skilled graduates (4.8 million graduates in fiscal year 2019) (Source: Ministry of Human Resource Development, Government of India)

Competitive Cost Advantage: The cost of sourcing services from India is approximately 81.0% lower than Tier II cities in the United States. Rents in Portfolio Markets in Q1 2020 were 50% to 90% lower in comparison to major global cities such as Shanghai, New York, London, Hong Kong and Singapore (Source: C&W Report).

Transition to Value Added Services: India’s services sector has successfully transitioned from being a low cost support and business process outsourcing location to a hub for high value added services and digital business offerings (IoT, cloud, analytics, block chain and digital solutions) (Source: C&W Report).

A Fun Fact

According to C&W Report, 100.3 msf was leased in its Portfolio Markets between 2014 and Q1 2020, which is approximately equal to the combined leasing in eight leading overseas office markets such as New York, Central London, San Francisco and Singapore. In addition, absorption for the Portfolio Markets is approximately 2.0 times the combined absorption of San Francisco, Greater Los Angeles, and New York over the same period (Source: C&W Report).


Profit & Loss

Balance Sheet

One thing that we clearly notice here is the rise of debt YoY continuously and one of the reasons for the REIT is to pay off debt.

Cash Flows

Experienced Management Team Backed by the KRC group

Mindspace REIT will be managed by the Manager led by Mr. Vinod Rohira, chief executive officer, and Ms. Preeti Chheda, chief financial officer. Mr. Vinod Rohira has been instrumental in leading the development of approximately 25.0 msf of commercial real estate for the KRC group, across India. Ms. Preeti Chheda has approximately 20 years of
experience, including 12 years with the KRC group, in equity and debt fund raising, acquisitions, overseeing the management of commercial real estate assets, raising private equity for real estate projects, investor relations and financial reporting.

Sponsors – Anbee Constructions LLP and Cape Trading LLP, which form part of the KRC group are one of the leading and reputed real estate developers in India with significant experience and knowledge of undertaking large-scale real estate developments across India. As of March 31, 2020, the KRC group has acquired and/or developed properties across various businesses (approximately 28.5 msf area of commercial projects, six operational malls, 2,554 operational hotel keys and residential projects across five cities in India). In addition, KRC group operates 278 retail outlets across India, as of March 31, 2020. The KRC group has approximately 40 years of real estate experience, and has a dedicated multi-skilled workforce of approximately 9,300 employees across its various real estate and retail businesses, as of March 31, 2020.

Projected Net Distributable Cash Flows (NDCF)


Combined Contingent Liabilities

Outstanding Litigation


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