NEW DELHI: Mindspace Business Parks REIT (Mindspace REIT) has shown remarkable operational performance with an occupancy rate nearing 94% as of the last quarter report. The REIT’s existing portfolio encompasses 30 million sq ft of completed space, alongside an additional 7-8 million sq ft currently under construction, expected to be finalized in the next two to four years, raising the total planned portfolio to around 38 million sq ft.
The company maintains a steady loan-to-value (LTV) ratio between 25% and 26%, feeling secure up to 35% before considering capital expansion. Additionally, it has consistently secured a solid 20% re-leasing spread across its portfolio.
In a recent interview with ETRealty in September 2025, Preeti Chheda, Chief Financial Officer of Mindspace Business Parks REIT, discussed the company’s growth plans, portfolio performance, rental trends, and the changing landscape of India’s retail assets. Here are some edited excerpts:
How is Mindspace REIT addressing global economic uncertainties, and what impact do you predict on India’s commercial sector?
The majority of recent office demand has primarily originated from Global Capability Centers (GCCs) and domestic companies. Currently, around 50% of our portfolio is dedicated to GCCs. We believe global uncertainties are actually advantageous for our narrative. As inflation rises in the USA due to tariffs and other global phenomena, businesses are aiming for efficiency, prompting many GCCs to relocate operations to India where real estate and talent are significantly more affordable. Notably, we observed the highest office space absorption in the first half of this year compared to the last five years.
So, it’s essentially the same office space, just under the GCC segment, correct?
Exactly, but the profile of the tenants is crucial. From a trend and economic perspective, the tenants significantly affect our dynamics. Nearly 50% of our REIT’s portfolio is currently leased to GCCs.
Can you explain the shift in demand between multinational corporations and domestic tenants?
A notable demand is coming from domestic entities spanning tech, BFSI (Banking, Financial Services, and Insurance), and manufacturing, fueled by the government’s ‘Make in India’ initiative. In August 2020, domestic tenants made up only 20% of our total rental portfolio, but that has now risen to over 25%. This change is not just visible; it’s improving.
That’s a substantial transition.
Indeed, and it continues to enhance. The jump from 15% to over 25% illustrates that domestic demand is on the rise, primarily encouraged by BFSI, manufacturing, and governmental support.
How is the government’s ‘Make in India’ initiative impacting office absorption amid global uncertainties?
It’s positively affecting our prospects. Moreover, GCC firms are relocating to India because both talent and real estate costs are considerably lower. The availability and affordability of local talent have driven many GCCs to move here, even during COVID-19, and this trend seems set to persist.
In the first half of this year, we recorded the highest office absorption in five years. We anticipate continued growth in GCC demand in India, supported by favorable government policies.
Are there any current impacts on absorption?
We haven’t noticed any significant impact from the global situation on absorption.
Regarding flexible workspaces, how do you balance allocations between traditional tenants and flexible spaces in your properties?
Currently, 6% of our overall portfolio is dedicated to flexible spaces, but we prefer to keep this below 10% due to the inherent uncertainties. While flexible spaces are significant consumers of office space, we remain cautious and favor the conventional model. Our flexible spaces are largely enterprise-backed, which mitigates some uncertainty; however, we are careful about expanding beyond that. Overall, the flexible workspace segment is growing, with new players entering the market.
What is your overall strategy for brand growth and increasing units in distribution?
We focus on two growth avenues: organic and inorganic. Organically, we have 7-8 million sq ft under development, which will contribute to our growth. Inorganically, we completed a sponsor acquisition of 1.8 million sq ft in Hyderabad in March 2025, followed by our first third-party acquisition of 800,000 sq ft in Hyderabad last month. We plan to pursue both routes.
What is the current occupancy status?
As of the last quarter, our occupancy rate was approximately 94%, which is quite robust.
How does the current 7-8 million sq ft under construction fit into the total portfolio size?
Currently, we have 30 million sq ft that is complete and operational. With an additional 7-8 million sq ft under construction, our total portfolio will rise to about 38 million sq ft within the next 2-4 years.
Are you exploring any new asset classes?
We fundamentally remain an office REIT. Although we have added around 1.6 million sq ft of data center space to our portfolio, availability for new data centers is limited due to nearing capacity. Our primary focus remains on office spaces.
What cities are you eyeing for expansion, and what scale is necessary for entry?
We are committed to being an office REIT and will keep focusing primarily on office assets. Currently, we operate in four key cities and plan to expand in those locations. We’re also exploring opportunities in Bengaluru and NCR, but entering new cities requires significant scale. To establish a presence, we typically need parks of around 2 to 3 million square feet; anything less can be economically challenging.
Are you facing a supply crunch that may restrict new asset acquisitions, especially with older buildings?
The consolidation of large portfolios, involving 10 to 20 million sq ft, has largely settled; however, many standalone assets are still available. Furthermore, we anticipate many privately-held assets will begin coming to market. We don’t believe opportunities have diminished. In fact, older assets, particularly in Tier 2 cities, present us with chances for redevelopment or renovation at favorable pricing, thanks to our expertise.
What are your current key financial metrics like LTV, re-leasing spreads, and distribution yield?
Our loan-to-value (LTV) ratio hovers around 25-26%. We are confident in maintaining this ratio up to 35%, beyond which we would consider raising equity. Our occupancy rate stands at approximately 94%, with the majority of our parks let out at 97-98%. We’ve consistently achieved re-leasing spreads of 20% over the previous quarters. Our current distribution yield is approximated at 6-8%, which is relatively lower due to significant increases in our share price.
How are rental markets performing across your key cities?
Rental rates have begun to climb. For instance, Hyderabad has reached triple-digit rentals (over ₹100), up from ₹70-₹75 a couple of years ago, largely due to supply shortages in areas like Madhapur. Pune has maintained stable rentals between ₹80-₹90. Airoli has seen increases from ₹55-₹60 to around ₹70. Chennai is also witnessing strong growth, with rents moving from ₹60-₹65 to between ₹70 and ₹80. Overall, while some markets like Hyderabad are experiencing significant growth, others are showing steady progress.
Does poor infrastructure influence rents?
Absolutely, infrastructure remains a challenge across all cities. However, inadequate infrastructure can create opportunities in emerging areas, where development is advantageous. It’s critical for governments to address these issues in major cities; otherwise, new markets will gradually emerge.
Currently, only a few key markets are crucial for office space, namely the North, West (1-2 markets), and South (3 markets), all of which face similar infrastructure challenges but also house a large talent pool. Ultimately, everyone wants to establish presence in these six hubs.
How have leasing spreads changed?
Leasing spreads have improved, with rents increasing 7-8% annually and leasing spreads around 20% in recent quarters due to rent escalation clauses.
Are you currently seeking funding?
Not at the moment unless a large acquisition arises. Our existing LTV is adequate to cover construction costs. If we consider significant acquisitions, we will explore funding options accordingly. We have sufficient leverage with a 25% LTV.
What capital deployment strategies do you have in place?
Most capital is channeled into the 7-8 million sq ft currently under construction, which represents the largest area for allocation. Other capital is reserved for acquisitions as opportunities surface.
What regulatory changes or policy reforms is the industry currently advocating for?
We have three primary requests. The most significant and longstanding is to SEBI for inclusion in indices. Being present in over 100 global equity indices, we believe that Indian REITs deserve to be included in local indices to attract passive investments and increase liquidity.
Secondly, we are asking regulatory bodies to facilitate more capital flow from sources such as pension funds (EPFO) and IRDA into REITs. Recent changes made by IRDA increased limits, and once this capital begins to flow, it will enhance liquidity in the market.
Lastly, we’ve long advocated for allowing banks to lend directly to REITs. Currently, banks can lend to SPVs (Special Purpose Vehicles) but not to the REIT parent entity. We strongly encourage the necessary changes to enable banks to directly lend to REITs. SEBI has shown support, as seen in previous income tax reforms, but this transformation requires time.
