Message from the CEO

Resilient performance at every level

Message from the CEO

Resilient performance
at every level

We remain committed to delivering long-term, sustainable value. Our portfolio is geared to attract top tenants in the fast-growing technology landscape of India as we prioritize health and safety and set new goals for sustainability

Dear Unitholders,

It is my pleasure to present to you our first Annual Report. We are proud to demonstrate our ability to adapt, work cohesively with all our stakeholders and deliver the targeted results in these unprecedented times. We continue to focus on creating win-win solutions across verticals and look forward to coming out much stronger post the pandemic.


Our successful listing on the bourses in August 2020 amidst the pandemic reflects investors’ trust and confidence in the Sponsor and the underlying resilient business model. Our IPO book saw an overwhelming response as it was oversubscribed c.13x with marquee global investors participating in the offering. Units of the REIT were offered at `275 per unit and closed at `294.87 as on March 31, 2021.


Commercial real estate saw demand softening through FY21 as a result of the ongoing pandemic. However, rentals in our micro-markets largely remained stable. In 2021, we expect new supply in our micro-markets to remain in check. The current demand environment is expected to extend further for at least 2-3 quarters.

Even in the given environment, with the help of cutting-edge technology, India has been on the forefront of delivering services. NASSCOM research suggests the technology services industry is estimated worth $194 billion in FY21 and has seen net hiring remain robust even during the pandemic. Most GCCs and GICs are looking at an increased workforce that is required to deliver the need for services. As the world is moving towards a digital economy, Indian IT sector is poised for a robust decade. This is expected to lead to a renewed demand for Grade A office spaces once the normalcy returns.

The definition of Grade A office spaces is evolving as we speak. Increased focus on health and safety, stronger tenant connect and sustainable buildings with resource efficient operations and are becoming the key norms.


We achieved gross leasing of 3.5 msf across 44 tenants at an average rent of `69 psf during FY21. Gross leasing includes re-leasing of 2.2 msf at a re-leasing spread of 19.1%; 53.5% of our gross leasing was to existing tenants while balance 46.5% was to new tenants. New clients added to the portfolio include marquee names such as AGC, Mindcrest, ADP, BP Global among other.

Committed occupancy of our portfolio stood at 84.2% as on March 31, 2021. While physical occupancy continues to remain low, we have efficiently utilized this downtime to refine our assets to provide re-energized experience along with new and enhanced health and safety protocols. The first phase is substantially complete, and we are ready with all options providing the best offerings and flexibility for our tenants.


Our thorough and efficient research has enabled us to design right solutions to cater to the top data center demand coming into India. We have successfully entered into agreement to lease with Princeton Digital, one of the leading data center operators in Asia for leasing 0.63 msf at Mindspace Airoli (West), Mumbai Region. With increased internet usage, growing demand for data storage and anticipated data localization norms, Mumbai stands to benefit due to its geographic and infrastructural advantage. The government’s ‘Digital India’ initiative and the ongoing pandemic have further accelerated digitization. We believe data center offers an excellent long-term opportunity to diversify our income avenues.


Mindspace REIT’s Revenue from Operations and Net Operating Income for FY21 stood at `16.3 billion and `13.7 billion on pro forma basis, growing by 5.1% and 12.1% y-o-y, respectively. We maintained NOI margins of over 80% on the back of topline expansion and cost optimization initiatives. We declared our first distribution for the first full quarter post listing which was quarter ending December 31, 2020 (as stated in our offer document). We declared distribution of `9.59 p.u. per unit in H2 FY21 which translates to an annualized yield of 7.0% on the IPO issue price of `275 per unit.


We place great emphasis on prudent capital management and deployment, helping us achieve a significant reduction in our cost of borrowing. Weighted average cost of borrowing of our portfolio remains low at 7.1% p.a.. Our low loan-to-value ratio of 14.0% offers us financial flexibility to pursue value accretive growth opportunities. During the year, we broad based our lender universe from banks to mutual funds and other capital providers. We re-financed part of the borrowings at Asset SPVs by raising fixed cost non-convertible debentures (NCDs) and market-linked debentures (MLDs) at REIT level. As a part of our green initiative, we also raised Green Loan for one of our projects at Pune.


We continue to focus on seamlessly weaving sustainable environmental, social and governance practices in our operations. Our continuous endeavour is to positively contribute towards the ecosystem we operate in.

On the environment front, we are working towards strengthening resource efficiency to minimize our carbon footprint. Key sustainability initiatives include a constant drive to achieve energy efficiency, improved air quality management, focus on renewable energy, water conservation and recycling measures etc. This has led to encouraging outcomes such as 14-36% energy savings in our Green buildings over the baseline case, c.30% more fresh air at most of our Green buildings over ASHRAE standard - 62.1-2004. During the year, we became the first real estate entity in India to commit to the Climate Group’s EV100 initiative with a target to achieve 100% electric mobility by 2030 at all our properties.

On the social front, we continue to build a culture of safety and inclusivity for our employees, tenants and society around us. We are committed to providing our employees with a nurturing and growth-oriented work environment. Our initiatives such as “ReachOut” for mental health and wellbeing and “Ekincare” an app based doctor consultation are aimed at ensuring wellbeing of our employees. We ensured availability of food, adequate medical aid and sanitized living spaces for labor at our sites. We are working with various government organizations for specific projects for the immediate need of COVID-19 patients. We partner with NGOs on education and health related programs. We continue to actively support makeover of Durgam Cheruvu Lake at Hyderabad to create a working and active waterfront.

We believe a firm governance structure plays a pivotal role in managing our business. The various processes, policies and trainings set the foundation for delivering on our ESG priorities and assessing the way forward for the business.


I take pride in the ability of Mindspace REIT’s team in consistently delivering results. We have been able to win many accolades with their focused efforts. Our efforts have been recognized by the internationally renowned British Safety Council with the COVID-19 Assurance Statement issued to six of our assets.


Our first priority continues to be the health and safety of our employees and tenants, while adhering to all the safety protocols across our parks. I admire the efforts of our onground support staff who have worked tirelessly to ensure business continuity for our tenants. While I write this letter, the Indian government has started to ramp-up the rollout of COVID-19 vaccines across the country. Getting majority of population vaccinated and achieving a significant drop in COVID-19 cases will be an important step towards the return to normalcy. We expect India shall remain at the forefront of delivering cutting-edge technology services, driving the demand for Grade A office spaces once normalcy returns.


I also take this opportunity to express my sincere gratitude to the Governing Board of K Raheja Corp Investment Managers LLP for their thought leadership, our unitholders, tenants, employees and other stakeholders for their unflinching support. We look forward to creating value together in the years to come.

Stay safe, stay healthy.

Best Regards,

Vinod Rohira