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Mindspace REIT to acquire 1.8-million-sq-ft IT park in Hyderabad for Rs 2,038 cr
Mindspace Business Parks REIT is acquiring the Commerzone Raidurg IT park in Hyderabad for Rs 2,038 crore, expanding its Hyderabad portfolio to around 15 million sq ft. The acquisition, fully leased to Qualcomm, increases the REIT’s total portfolio size to 36.6 million sq ft and boosts income stability.
K Raheja Corp-backed Mindspace Business Parks REIT is set to acquire an information technology (IT) park Commerzone Raidurg with 1.82 million sq ft office space in Hyderabad’s Madhapur micro market for an enterprise value of Rs 2,038 crore.
The entire IT park is already leased to USbased semiconductor and telecommunications company Qualcomm. The REIT held a Right of First Offer (ROFO) for this property as per a pact entered with the sponsor and is now exercising the option.
The asset with leasable area of 1.82 million sq ft, which is part of a larger development spanning 2.8 million sq ft, strengthens Mindspace REIT’s presence in Hyderabad, taking the portfolio size in the southern city to around 15 million sq ft.
Following this acquisition, the REIT’s entire portfolio size will grow to 36.6 million sq ft and committed occupancy will increase to 92% from 91.5%. The Gross Asset Value (GAV) of the portfolio will increase to Rs 33,550 crore and Loan-to-Value (LTV) ratio will rise to 25.3%.
“Located in Hyderabad’s prime central business district, this Grade-A+, fully leased asset enhances our portfolio, boosts income stability, and aligns with our growth strategy. With a marquee tenant and mark to market potential, reflects our focus on strategic investments in high-quality, income-generating assets. This acquisition strengthens our presence in a dynamic market and supports long-term financial stability,” said Ramesh Nair, CEO, Mindspace REIT.
The acquisition price of Rs 2,038 crore is at 7.5% discount to the average of two independent valuations and the company will be funding this with a preferential issue of units worth Rs 613 crore to the sponsor.
The REIT will acquire 100% equity shareholding in Sustain Properties that owns the Grade-A commercial asset, which has Weighted Average Lease Expiry (WALE) of 12 years that provides long term stable income. Rentals at this commercial property are currently Rs 69 per sq ft per month, indicating significant mark-to-market (MTM) potential.
The acquisition will add Rs 167 crore to the REIT’s current financial year’s net operating income; implying a growth of 8.2% owing to this transaction alone.
The REIT’s board has approved the acquisition and preferential issue of units aggregating up to Rs 613 crore, subject to unitholders and other regulatory approvals, as may be required.
Mindspace Business Parks REIT’s current office portfolio has a total leasable area of 34.8 million sq ft comprising 26.8 million sq ft of completed area, 4.6 million sq ft of area under construction and 3.4 million sq ft of future development.
The portfolio consists of five integrated business parks and five independent office assets located in four key office markets of India including Mumbai Region, Pune, Hyderabad, and Chennai.
Source: The Economic Times