Mindspace REIT Q3 FY26: NOI Jumps 29% on Strong Leasing

Introduction to Q3 FY26 Performance

Mindspace Business Parks REIT, backed by K Raheja Corp, announced a strong performance for the third quarter of fiscal year 2026, ending in December. The Real Estate Investment Trust reported a net operating income (NOI) of Rs 671 crore, marking a significant 29% increase compared to the same period last year. This growth was primarily fueled by robust leasing activity and favorable rental revisions across its Grade-A office portfolio.

Operational Strength and Leasing Momentum

The quarter was characterized by substantial leasing momentum. Mindspace REIT achieved gross leasing of approximately 1.1 million square feet, demonstrating sustained demand for high-quality commercial real estate. This strong leasing activity contributed to a sequential increase in committed occupancy, which rose to 94.5%. The REIT's ability to attract and retain tenants is further highlighted by its impressive re-leasing spread of 27.4% on 1 million square feet of re-let office space. This indicates a healthy increase in rental rates for renewed leases, reflecting the premium nature of its assets.

Management Commentary

Ramesh Nair, CEO and MD of Mindspace REIT, described the quarter as strong and stable. He attributed the success to the record demand for Grade-A office assets and the company's focused execution across its portfolio. "We achieved a gross leasing of around 1.1 million square feet, while committed occupancy grew sequentially to around 94.5%," Nair stated. He emphasized the company's commitment to pursuing accretive acquisition opportunities to deliver value to unitholders.

Key Financial Highlights for Q3 FY26

The REIT's financial results underscore its operational efficiency and growth trajectory. Revenue from operations for the quarter rose 27% year-on-year to Rs 816 crore. The total distribution to unitholders for the quarter stood at Rs 378 crore, a 20% increase over the previous year. On a per-unit basis, the distribution was Rs 5.83, representing a 10% year-on-year growth. Since its listing in August 2020, the REIT has cumulatively distributed Rs 6,330 crore to its unitholders.

Portfolio Expansion and Strategic Acquisitions

During the quarter, Mindspace REIT expanded its portfolio by adding approximately 800,000 square feet of leasable area across three buildings in Mumbai and Pune. These assets were acquired from its sponsor, K Raheja Corp. This move is part of a broader strategy of inorganic growth, which has added 4 million square feet to the portfolio since the REIT's listing. The company has also signaled its intent to pursue more third-party acquisitions to further enhance rental income, following its first such acquisition in 2025.

Prudent Debt Management

Mindspace REIT has maintained a healthy balance sheet, with a focus on optimizing its cost of debt. The cost of debt was reduced by 13 basis points sequentially to 7.39% per annum. The REIT successfully raised Rs 1,900 crore through non-convertible debentures (NCDs) at a competitive rate of 6.98% per annum. Its Loan-to-Value (LTV) ratio stood at a conservative 24.9%, well within comfortable limits and providing ample headroom for future growth initiatives.

Market Dynamics and Future Outlook

The demand for office space in India remains strong, particularly from Global Capability Centers (GCCs) and large domestic corporations. Mindspace REIT is well-positioned to capitalize on this trend, with a significant portion of its portfolio leased to these segments. The company's assets are strategically located in key micro-markets like Mumbai, Pune, and Hyderabad, where rental growth has been robust. The in-place rent for the portfolio averages Rs 75 per square foot per month.

Looking ahead, Mindspace REIT is actively working on an under-construction pipeline of 3.6 million square feet. This development pipeline, combined with a clear strategy for accretive acquisitions, positions the REIT for sustained growth in both rental income and distributions to its unitholders.