Mindspace Busine — Q4 FY25 earnings call

Call held 30 Apr 2025

Management summary

Mindspace REIT delivered its strongest operational performance since listing, characterized by record-breaking leasing activity and significant portfolio expansion through acquisitions. The company successfully navigated SEZ vacancy concerns, leasing 57% of converted areas, and is aggressively expanding its data center footprint. Management remains bullish on GCC-led demand, particularly in Hyderabad, and expects further distribution growth driven by occupancy gains and debt refinancing.

Highlights

  • Recorded highest-ever annual gross leasing of 7.6 million sq ft in FY25, including 3.6 million sq ft of pre-leasing.

  • Net Operating Income (NOI) for FY25 rose 9% YoY to ₹2,062 crores; Q4 NOI grew 13.2% YoY to ₹540 crores.

  • Full-year distribution stood at ₹1,312 crores (₹21.95 per unit), representing a 15.5% YoY growth.

  • Committed occupancy increased to 93%, with management targeting 95% by the end of FY26.

  • Achieved a robust re-leasing spread of 22.8% for FY25 on 3.6 million sq ft of area re-let.

  • Completed first ROFO acquisition of 1.8 million sq ft at Commerzone Raidurg, Hyderabad.

  • Net Asset Value (NAV) increased 10% to ₹431.7 per unit as of March 2025.

Key financials

  1. Revenue from Operations ₹2,560 Cr +9.6%YoY
  2. Net Operating Income (NOI) ₹2,062 Cr +9%YoY
  3. Distribution ₹1,312 Cr +15.5%YoY
  4. NAV per Unit ₹431.7 +10%YoY
  5. Loan to Value (LTV) 24.3%

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

  • Geographic Portfolio (Madhapur)
    15.5 million sq ft Portfolio Size1.5 million sq ft Pre-lease (B1 Building)
  • Data Centers
    1.7 million sq ft Total Planned Footprint2 Operational Centers

Guidance & targets

Other

  • Committed Occupancy Other · by April 2026 · High confidence 95%

    From 93% today

    We are hoping this will go to the 95% mark by end of this financial year. That is going to be the focus.

    — Ramesh Nair, CEO

Capacity

  • Data Center Footprint Capacity · Medium Term · High confidence 1.7 million sq ft
    Once completed, the total data center footprint will reach 1.7 million square feet, where India's only REIT with a robust data center portfolio.

    — Ramesh Nair, CEO

Debt

  • Interest Rate Reduction on Refinancing Debt · Q1 FY26 · Medium confidence 50-60 bps
    today, we already are seeing the rates going really 50-60 points reduction versus the last quarter, which is a significant interest saving.

    — Preeti Chheda, CFO

Dividend

  • Dividend Component of Distribution Dividend · Ongoing · High confidence 55%-60%
    I would say, today we are about 55%-60% dividend... I would think that will broadly be around these percentages for each category.

    — Preeti Chheda, CFO

Risks & concerns

  • Interest Rate Transmission Lag

    medium

    Banks take longer to transmit policy rate reductions to MCLR-linked debt, delaying interest cost savings.

    Management acknowledged

  • SEZ Vacancy

    medium

    While 57% of converted areas are leased, 8 lakh sq ft of SEZ vacancy remains.

    Management acknowledged

  • Geopolitical/Tariff Uncertainty

    low

    Potential US tariffs on services; management believes India's cost arbitrage is too large to be significantly disrupted.

    Analyst downplayed

Areas of evasion (1)

  • Refused to put a specific number on future double-digit DPU growth, citing it 'should be healthy'.

Q&A highlights

3 direct
Impact of Global Geopolitical Events and Tariffs Direct
All numbers, whenever I read a GCC report, every GCC talks of the cost in India versus a Western economy at 20%... Let us assume this 20% becomes goes up by another 25% and we are still at 25% right of the overall cost.

Management clarifies that India's massive cost advantage (80% lower than West) provides a significant buffer against potential US tariff impacts on the services sector.

Asked by Puneet, HSBC

DPU Growth vs NOI Growth Direct
your NOI growth in a large extension translate to DPU growth... some of the working capital movements also could help... but I would say essentially your NOI growth translate to your DPU growth now.

Confirms that while one-offs (tax refunds) helped Q4, the underlying NOI growth is the primary sustainable driver for future distributions.

Asked by Kunal Tayal, Bank of America

Occupancy Drivers in Airoli Direct
Airoli, our focus is going to be on Indian domestic financial services... back offices of large media companies... Flex players are getting more demand... our occupancy in Airoli was at that time 76%. Now, that has grown to 84%.

Identifies the specific micro-market (Airoli) and sectors (BFSI, Media, Flex) that will drive the next leg of occupancy growth toward the 95% target.

Asked by Parvez, Nuvama Group

2 min read 5 chapters

Detailed narrative

Record-Breaking Leasing and Occupancy Momentum

Mindspace REIT achieved its highest-ever annual gross leasing of 7.6 million sq ft in FY25, significantly surpassing previous years. This momentum was driven by strong demand from Global Capability Centers (GCCs), which are projected to account for 40% of 2025 absorption. Committed occupancy rose to 93%, and management has set a clear target to reach 95% by the end of FY26, primarily by filling vacancies in the Airoli assets through domestic BFSI and media tenants.

Strategic Expansion via ROFO and Acquisitions

The company successfully concluded its first ROFO transaction, acquiring 100% equity in Sustain Properties, which houses 1.8 million sq ft at Commerzone Raidurg, Hyderabad. Additionally, a strategic acquisition of 0.26 million sq ft in Mindspace Madhapur helped consolidate ownership. These acquisitions added approximately ₹25 billion to the Gross Asset Value (GAV), contributing to a 10% increase in NAV per unit to ₹431.7.

Data Center Strategy Gains Traction

Mindspace is positioning itself as the only Indian REIT with a robust data center portfolio, targeting a total footprint of 1.7 million sq ft. Currently, two data centers are operational at Airoli West, with three more in the design stage. This segment contributed significantly to Q4 cash flows, with approximately ₹50 crore in deposits received from data center leasing.

Financial Resilience and Distribution Growth

FY25 NOI grew 9% YoY to ₹2,062 crores, while distributions grew at a faster clip of 15.5% to ₹1,312 crores. The Q4 distribution was particularly strong, up 39% YoY, aided by a one-off tax refund of ₹35-40 crore and positive working capital movements. Management expects NOI growth to continue translating directly into DPU growth as new completions and acquisitions stabilize.

Debt Management and Interest Rate Outlook

The LTV remains healthy at 24.3%, well within the management's comfort range of 30-35%. While the cost of debt slightly increased to 8.15% due to the ROFO acquisition, the company has already refinanced part of this debt at a 1% lower interest cost. Management anticipates a further 50-60 bps reduction in debt costs in the coming quarters as they refinance upcoming maturities in a softening interest rate environment.

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