Mindspace Busine — Q1 FY26 earnings call

Call held 4 Aug 2025

Management summary

Mindspace REIT delivered a robust Q1 FY26, characterized by record leasing activity and the highest NOI growth since its listing. The company successfully executed its first external acquisition in Hyderabad's financial district, signaling a shift toward a more aggressive inorganic growth strategy. Management's focus on debt optimization and SEZ de-notification has significantly improved occupancy and cash flows, positioning the REIT to target 95% occupancy by year-end.

Highlights

  • Net Operating Income (NOI) grew 24.2% YoY to ₹616 crores, the highest growth since listing.

  • Revenue from operations increased by 21.4% YoY to ₹750 crores (₹7.5 billion).

  • Achieved record gross leasing of 1.7 million sq ft with a re-leasing spread of 29.5%.

  • Committed occupancy reached a record high of 93.7%, with 5 out of 11 assets at 100% occupancy.

  • Distribution per Unit (DPU) grew 14.9% YoY to ₹5.79, totaling a distribution of ₹352 crores.

  • Completed first third-party acquisition (Q-City, Hyderabad) for ₹512 crores at a 9.9% cap rate.

  • Weighted average cost of debt reduced by 31 bps QoQ to 7.84%.

  • In-place rent stands at ₹73 per sq ft per month for the entire portfolio.

Key financials

  1. Net Operating Income (NOI) ₹616 Cr +24.2%YoY
  2. Revenue from Operations ₹750 Cr +21.4%YoY
  3. Distribution Per Unit (DPU) ₹5.79 +14.9%YoY
  4. Committed Occupancy 93.7%
  5. Cost of Debt 7.8% -0.31%QoQ

What they filed

Q1 FY27: revenue up 27.8%, net profit up 62.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue649 649 681 740 772 +19%814 +25%890 +31%946 +28%
EBITDA468 470 484 550 575 +23%626 +33%683 +41%714 +30%
Net profit135 145 96 167 127 −6%192 +32%209 +118%272 +63%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Hyderabad (Madhapur & Financial District)
    16 million sq ft Portfolio Size15% Rental Growth (Citywide)9.9% Q-City Cap Rate
  • Navi Mumbai (Airoli West & East)
    92% Airoli West Occupancy85% Airoli Overall Occupancy₹70/psf New Deal Rents

Guidance & targets

Other

  • Portfolio Committed Occupancy Other · FY26 · High confidence 95%
    Objective is to take it to around 95% by end of this financial year.

    — Ramesh Nair, CEO

  • Q-City Leasing Target Other · next 15 to 18 months · Medium confidence 90%+
    In terms of, we believe we should be able to fill this up in the next 15 months to 18 months.

    — Ramesh Nair, CEO

Capex

  • Portfolio Upgrade Capex Capex · next 12 months · High confidence ₹210 crores
    So, in the next 12 months, we are planning to spend around Rs. 210 crores on upgrades.

    — Ramesh Nair, CEO

  • Q-City Upgrade Capex Capex · FY26 · Medium confidence ₹40-50 crores
    For Q City... It is going to be between Rs. 40-Rs. 50 crores is what we are planning right now.

    — Ramesh Nair, CEO

Debt

  • Cost of Debt Reduction Debt · FY26 · Medium confidence 25-30 bps
    From here, I would say another 25-30 bps we should be able to get.

    — Preeti Chheda, CFO

Risks & concerns

  • Supply Saturation in Madhapur

    medium

    Analysts questioned rising vacancies in the micro-market; management argued institutional vacancy is much lower (17%) than non-institutional strata-sold stock.

    Analyst downplayed

  • SEZ Demarcation Pipeline

    low

    350k sq ft in Airoli East and 200k sq ft in Madhapur are still awaiting demarcation, though the process has become faster (45 days).

    Both acknowledged

  • Interest Rate Volatility

    low

    Management is working to convert variable-cost borrowings to fixed-cost to lock in lower coupons as rates soften.

    Management acknowledged

Areas of evasion (1)

  • Specific timelines for future ROFO assets.

Q&A highlights

2 direct
Distribution Composition and Interest Component Direct
The amount which we have lent for which we are taking out interest is a very small component as compared to the other. Because overall composition, therefore, you are not seeing a material amount.

Explains why the distribution mix has shifted toward capital return/amortization rather than interest, which has tax implications for retail investors.

Asked by Tanvir

Q-City Acquisition and Redevelopment Potential Direct
Redevelopment potential is 3x plus. What is there today? Today, we have 8 lakh square feet building on a 6 acre plot. This could easily... become a 25 lakh square feet kind of a building.

Highlights the 'opportunistic' nature of the acquisition, where the value lies not just in current yields but in massive future densification.

Asked by Pritesh Sheth, Axis Capital

SEBI Consultation Paper on Equity Classification Partial
Assuming if we get included in the indices, then obviously, we believe that the liquidity will stand improved... whether that leads to any compression of yields, etc., are difficult to comment.

Addresses a major regulatory catalyst that could drive passive inflows and yield compression for the REIT sector.

Asked by Harsh Kayan, Kayan Securities

2 min read 5 chapters

Detailed narrative

Record Operational Performance and Leasing Momentum

Mindspace REIT achieved its highest-ever committed occupancy of 93.7% in Q1 FY26, driven by 1.7 million sq ft of gross leasing. The re-leasing spread was a significant 29.5%, reflecting strong demand for Grade A green-certified campuses. Management noted that 5 out of 11 assets are now at 100% occupancy, and they are targeting a portfolio-wide occupancy of 95% by the end of the fiscal year.

Strategic Inorganic Expansion via Q-City

The REIT completed its first third-party acquisition outside its existing parks, purchasing Q-City in Hyderabad for ₹512 crores. The asset was acquired at a 9.9% cap rate and offers significant redevelopment potential, with the possibility of expanding the current 0.8 million sq ft to 2.5 million sq ft (3x plus). Management plans to invest ₹40-50 crores in upgrades to bring occupancy from the current 65% to over 90% within 15-18 months.

Debt Optimization and Financial Health

The weighted average cost of debt saw a sharp decline to 7.84%, down from 8.15% in the previous quarter. This was achieved through proactive refinancing and the issuance of ₹14 billion in Commercial Papers and NCDs at competitive rates. The CFO guided for a further 25-30 bps reduction in debt costs as interest rates soften and the REIT converts variable-rate debt to fixed-rate instruments.

Micro-market Dynamics: Hyderabad and Navi Mumbai

Hyderabad remains a core growth driver, with citywide rentals up 15% YoY and Madhapur seeing close to a 20% increase. In Navi Mumbai, Airoli West occupancy jumped from 72% in December 2023 to 92% following SEZ demarcation rules. New deals in Airoli are being signed at ₹70 psf, a significant step up from the historical range of late ₹50s to early ₹60s.

Distribution Strategy and Investor Returns

The REIT declared a DPU of ₹5.79, representing 14.9% YoY growth. Management addressed investor queries regarding the distribution mix, noting that the interest component is currently small because the gap between borrowing rates and lending rates to SPVs is narrow. As newer SPVs with higher debt levels are integrated, the component of loan amortization/capital return has increased, which management views as a natural evolution of the SPV structures.

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