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Mindspace Reit acquires Hyderabad's Q-City office asset for ₹512 crore
Mindspace Reit is buying the property at an 11.6 per cent discount to its independently assessed value. The cap rate for the deal is around 9.9 per cent. 'Securing the property at an 11.6 per cent discount to an independent valuation and an attractive 9.9 per cent cap rate demonstrates our disciplined capital deployment and commitment to long-term value for unitholders,' said Ramesh Nair, chief executive officer and managing director of the Reit.
Once the property is stabilised, it is projected to generate about ₹53.5 crore of net operating income (NOI), which would increase the Reit's income by approximately 2.6 per cent, considering its FY25 NOI of ₹2,062 crore.
The acquisition implied a capital value of ₹6,130 per sq ft and has been funded via debt. In May, the Reit's investment manager approved a fundraise of ₹1,800 crore. On 23 July, the Reit issued and allotted commercial papers aggregating to ₹540 crore on a private placement basis. The Reit's net debt as of FY25 stood at ₹8,897.6 crore.
This is the Reit's first third-party asset addition outside its portfolio parks. The transaction has been undertaken through Horizonview Properties, a special purpose vehicle asset of Mindspace Reit. The acquired asset shall be rebranded as 'The Square, 110 Financial District'.
The acquired asset has a leasable area of 0.81 msf, located in the Financial District of Hyderabad. Currently, around 65 per cent of the asset is occupied. 'The asset stands to gain from Mindspace Reit's robust tenant network and asset enhancement expertise, driving quicker lease-up of the balance space,' the Reit claimed. Occupancy levels across Mindspace's assets stood at around 93 per cent as of Q4 FY25.
With this, Mindspace Reit's Hyderabad presence is now over 16 msf in aggregate. Nair said, 'Hyderabad market is India's hottest GCC hub, now home to more than 350 global capability centres and the nation's fastest-growing tech and BFSI talent base. With institutional-quality supply extremely tight and virtually no major investment-grade assets on the market, the timing is ideal. As Madhapur and HITEC City approach capacity, global occupiers are migrating westward in the city, and our acquisition positions us to capture this demand.'
In Hyderabad, Madhapur rentals have risen to ₹90–100 per sq ft due to limited supply and higher demand. Rental arbitrage with Madhapur positions Financial District to benefit from demand spillover, Mindspace claimed.
Post-acquisition, the Reit's portfolio size will grow from 37.1 msf to 37.9 msf, while its gross asset value (GAV) will increase from ₹36,647 crore as of FY25 to ₹37,143 crore. The loan-to-value (LTV) ratio will marginally increase from 24.3 per cent as of FY25 to 25.1 per cent. The transaction will also increase the net asset value by ₹1.8 per unit.
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