Bagmane Prime Office REIT targets 18% rent reset as 26% renews by FY30

Bagmane REIT is targeting 18% mark-to-market growth in its in-place rents as 26% of gross contracted rentals comes up for renewal by FY30. Management outlined that opportunity on the Q2 FY27 earnings call after the REIT achieved a 9% mark-to-market increase on 0.5 million square feet re-leased during the quarter.

How much of Bagmane REIT's rent will be renewed by FY30?

Bagmane REIT said 26% of gross contracted rentals will come up for renewal by FY30, creating the identified window to pursue its 18% mark-to-market potential in in-place rents. Management named contractual escalations, mark-to-market on renewals and re-leasing, and income from developments as its three rental-growth mechanisms.

The Q2 FY27 call did not provide an annual expiry schedule through FY30, the rupee value of expiring contracted rentals, or a property-level break-up of the 26% figure. The disclosure therefore identifies the share of the rent base due for renewal, rather than a committed timing or amount of rental uplift in each financial year.

For the nearer term, an analyst cited 0.7 million square feet of expiries in the second half and a 10% mark-to-market assumption. Management said almost 40% of that area was already leased, another 15% was under renewal, and the remaining 45% was expected to terminate while discussions with clients continued. Management said it expects to achieve the 10% mark-to-market on that pool.

What evidence has Bagmane REIT reported for its rental reset target?

Bagmane REIT reported a 9% mark-to-market increase on 0.5 million square feet re-leased in Q2 FY27, the latest realised renewal and re-leasing outcome cited alongside the 18% potential. In H1 FY27, the mark-to-market increase was 11% across 0.8 million square feet, 2 percentage points above the Q2 result.

Since FY23, Bagmane REIT said its average re-leasing spread has been 15%, and 91% of leasing has come from existing tenants staying or expanding. Leases signed in Q2 FY27 carried an average rent of Rs 166 per square foot per month, while management said those leases were executed above prevailing market rents.

The completed portfolio had committed occupancy of 99% on September 30, 2026, compared with 98.7% in June 2026. That occupancy covered 16.7 million square feet, and the portfolio's weighted average lease expiry was 6.1 years. Bagmane REIT also said committed occupancy had remained above 94% since March 2021, during which rentals grew at a 5.9% compound annual growth rate.

How does leasing support Bagmane REIT's rental growth plan?

Bagmane REIT leased 1.2 million square feet in Q2 FY27, more than four times its first-quarter leasing, taking gross leasing in H1 FY27 to 1.4 million square feet. Global capability centres accounted for 96% of Q2 leasing, compared with a portfolio where 93% of tenants are global capability centres.

New commitments included 326,000 square feet from a big four consulting firm, 295,000 square feet from OpenText, and 269,000 square feet from Texas Instruments. A Fortune 500 semiconductor company leased 54,000 square feet, while Volvo took a further 11,000 square feet. Management also cited renewals with an AI-powered customer relationship management platform and Emphasis totalling about 202,000 square feet.

Half of Q2 FY27 leasing, or 0.6 million square feet, related to space under development. At Cosmos Business Park, 60% of 1 million square feet under construction was pre-leased before completion. Ceres was 54% pre-leased and on track for Q3 FY27 completion, while Aurora was 63% pre-leased and on track for Q4 FY27 completion.

What financial capacity does Bagmane REIT have to execute the plan?

Bagmane REIT reported Q2 FY27 revenue from operations of Rs 765 crore and net operating income, or NOI, of Rs 684.4 crore, producing an NOI margin of 89%. H1 FY27 revenue was Rs 1,500 crore and NOI was Rs 1,340 crore, with a 90% margin, 1 percentage point above the quarterly margin.

The board declared a Q2 FY27 distribution of Rs 527 crore, or Rs 1.55 per unit, bringing H1 FY27 distributions to Rs 1,040 crore, or Rs 3.05 per unit. Management said 79% of the Q2 distribution was dividends, which it described as tax-exempt in the hands of unitholders.

Management reported net debt of Rs 1,700 crore and a loan-to-value ratio of 4% as of September 30, 2026. The balance cost to complete current office, solar and hotel developments was about Rs 1,100 crore, compared with Rs 18,000 crore of debt headroom. Bagmane REIT also has a right-of-first-offer pipeline of more than 47 million square feet across Bengaluru, Chennai and Delhi.

Conclusion

The 18% mark-to-market potential and the 26% of gross contracted rentals due for renewal by FY30 position lease repricing as a stated part of Bagmane REIT's rental-growth plan. The 9% Q2 FY27 re-leasing increase, 11% H1 FY27 outcome and 15% average re-leasing spread since FY23 provide the reported benchmarks against that management target.

The next markers are the second-half 0.7 million-square-foot expiry pool, where management expects a 10% mark-to-market, and the scheduled completion of Ceres in Q3 FY27 and Aurora in Q4 FY27. Management's ability to convert the 60% pre-leased share of the 1 million square feet under construction into operating income will also determine how development income contributes to the FY30 plan.