Mindspace REIT Bolsters Portfolio with Strategic Acquisitions in Mumbai and Pune

Mindspace Business Parks REIT has made a significant move in the Indian commercial real estate market by acquiring three prime commercial assets in Mumbai’s business districts of Worli and Bandra-Kurla Complex, and Pune’s Kalyani Nagar for Rs 2,916 crore. The assets are being acquired from its sponsor, K Raheja Corp Group.

The listed REIT will fund the transaction partly through a preferential issue of units worth up to Rs 1,820 crore, subject to unitholder and regulatory approvals. Additionally, the REIT will take over debt and other liabilities worth Rs 1,090 crore.

These office assets collectively cover around 0.8 million square feet of leasable office space. Independent valuers have pegged their Gross Asset Value (GAV) at Rs 3,106 crore. With this transaction, Mindspace REIT’s portfolio will expand to nearly 39 million square feet.

Ramesh Nair, MD & CEO of Mindspace REIT, emphasized the strategic importance of the acquisition. “This move enhances the REIT’s scale, stability, and presence in Mumbai’s CBD markets and supports long-term portfolio growth. Bringing these high-quality, institutional assets into our portfolio, with strong cash flows and anchor tenants from Wall Street, is a significant step forward.”

As part of the deal, the REIT will acquire Pramaan Properties, which owns approximately 0.45 million square feet at Ascent in Worli and around 0.1 million square feet of office space in Kalyani Nagar. It will also acquire Sundew Real Estate, the owner of nearly 0.2 million square feet at The Square Avenue 98 in the BKC Annexe.

The acquisition cost of Rs 2,916 crore reflects a discount of around 6.1% compared to the average of two independent valuations. The REIT expects the acquired portfolio to add approximately Rs 226 crore to its financial year 2025-26 net operating income on a proforma basis, representing a growth of about 9%.

The proforma distribution per unit accretion is estimated at around 1.7%, and the front-office portfolio value contribution is expected to rise to nearly 7.9%. The committed occupancy for the acquired assets stands at around 86% for Ascent-Worli and 100% for both the BKC Annexe and Pune buildings. The projected weighted average lease expiry (WALE) for the combined portfolio is nearly seven years.

The BKC Annex asset offers value-add opportunities through Mark to Market potential and area enhancement, according to the REIT.

Mindspace REIT has a history of strategic acquisitions, including Commerzone Raidurg, consolidation at Commerzone Porur, expansions at Commerzone Yerwada, and the purchase of The Square, 110 Financial District in Hyderabad. This current transaction is its second sponsor acquisition and brings the total acquisitions to nearly 3.2 million square feet since listing.

Mindspace REIT, listed in August 2020, owns office parks and standalone assets across Mumbai Region, Pune, Hyderabad, and Chennai, with a total leasable area of 38.2 million square feet as of 30 September 2023.