Mindspace Business Parks Reit · NSE:MINDSPACE.RR
Mindspace Business Parks Reit — Q2 FY23 Earnings Presentation
56 slides from Mindspace Business Parks Reit's earnings presentation, Nov 14, 2022
Slide 1: Q2 FY23 Results Presentation
Q2 FY23 Results Presentation 14th November 2022 mindspacereit.com 1
Slide 2: Disclaimer
Disclaimer By attending the meeting where this presentation (“Presentation”) is made, or by reading the Presentation materials, you agree to be bound by the following limitations: This Presentation (a) is for information purposes only without regards to specific objectives, financial situations or n
Slide 3: Table of Contents
Table of Contents Key Updates 04 Portfolio Overview 12 Projects Update 19 Financial Update 25 Price Performance & Unitholding 30 Market Updates 33 Value Creation via ESG 38 Annexures 46 Note: 1. For ease and simplicity of representation, certain figures may have been rounded 2. Mindspace Business Pa
Slide 4: Key Updates
01 Key Updates mindspacereit.com 4
Slide 5: Mindspace REIT – At a Glance (H1 FY23)
Mindspace REIT – At a Glance (H1 FY23) 1 Operating Highlights 2.1 msf (1)(6) 1.3 msf (1)(6) 0.9 msf 28.0 % INR 62 psf/month Received acquisition Re-leased Area Re-leasing Spread (2) Average Gross Leasing New and Vacant Area notice for 0.16 msf, The Leased on 1.3 msf Rent achieved on Gross Leasing Sq
Slide 6: Key Highlights - Q2 FY23
Key Highlights - Q2 FY23 1 Operating Highlights New & Vacant Gross Leasing 1.3 msf (1)(5) Area Leased 0.7 msf (1)(5) Average Rent achieved on Gross Leasing INR 62 psf month Re-leased 0.6 msf 2 Financial Highlights Weighted NOI(2) INR 4,172 Mn Average Cost of debt as of 7.3 % p.a. (3.9% growth q-o-q)
Slide 7: Leasing Overview – H1 FY23
Leasing Overview – H1 FY23 2.1 msf leases signed across 44 tenants and achieved 28.0% Re-leasing spread on 1.3 msf 2.14 msf (1)(2) INR 62 psf/month 28.0% H1 FY23 Gross Leasing Average Rent for Area Leased Average Re-leasing Spread(3) H1 FY23 - Split Basis Type of Tenants 0.89 msf (4) Area Re-leased
Slide 8: Leasing Overview – Q2 FY23
Leasing Overview – Q2 FY23 1.3 msf leases signed across 26 tenants and achieved 22.3% Re-leasing spread on c.0.8 msf 1.27 msf(2)(3) INR 62 psf/month 22.3 % Q2 FY23 Gross Leasing Average Rent for Area Leased Average Re-leasing Spread(1) Q2 FY23 – Gross leasing Area Re-leased (4) 0.54 msf Leased Asset
Slide 9: Delivered Sustainable Financial Performance
Delivered Sustainable Financial Performance NOI Growth aided by Sustained Strong Leasing Growth Growth (in INR Mn) Q2 FY22 Q1 FY23 Q2 FY23 H1 FY22 H1 FY23 (y-o-y) (y-o-y) Revenue from Operations (1) 4,237 4,910 4,974(2) 17.4% 8,455 9,884(2) 16.9% NOI (1) 3,595 4,014 4,172(3) 16.0% 7,213 8,186(3) 13.
Slide 10: De-risked Portfolio with 92.1% Completed Assets (by Value)
De-risked Portfolio with 92.1% Completed Assets (by Value) Statement of Net Assets at Fair Value Movement of NAV (INR p.u.) (INR Mn) Sr. No. Particulars 30 Sep 22 A Fair Value of Real Estate Assets (1) 272,829 14.9 (9.6) B Other Assets at Book Value 7,255 C Other Liabilities at Book Value 60,519 370
Slide 11: Distribution for Q2 FY23
Distribution for Q2 FY23 Over 90% distributions are in the form of tax-exempt dividends Key Dates Distribution Yield (1) 6.9% Period Jul 22 to Sep 22 Distribution Amount INR 2,817 Mn Outstanding Units 593,018,182 Declaration Date 14 Nov 22 Interest ₹0.36 Record Date 21 Nov 22 7.6% Distribution per u
Slide 12: Portfolio Overview
02 Portfolio Overview mindspacereit.com 12
Slide 13: Portfolio Overview
Portfolio Overview Mindspace REIT is one of the largest Grade-A office portfolios in India 31.9 msf INR 63.0 psf Total Leasable Area (1) In-place Rent 86.5% 86.9% Same Store Committed Committed Occupancy Occupancy on 24.0 msf on 24.9 msf ` Mumbai Region Hyderabad 14.1% 6.8 years 12.9 msf (40.4 %) 12
Slide 14: Five Integrated Business Parks
Five Integrated Business Parks Mindspace Madhapur Mindspace Airoli East Hyderabad | 11.8 msf Mumbai Region | 6.8 msf Completed Area: 9.9 msf; Committed Occupancy: 89.4% Completed Area: 4.7 msf; Committed Occupancy: 86.3% Mindspace Airoli West Gera Commerzone Kharadi Commerzone Yerwada Mumbai Region
Slide 15: Five Quality Independent Office Assets
Five Quality Independent Office Assets Commerzone Porur Paradigm, Mindspace Malad Chennai | 0.9 msf (1) Mumbai Region | 0.7 msf Completed Area: 0.9 msf; Committed Occupancy: 59.5% Completed Area: 0.7 msf; Committed Occupancy: 94.9% The Square, Nagar Road Mindspace Pocharam The Square, BKC Pune | 0.8
Slide 16: Marquee Tenant Base
Marquee Tenant Base Leading MNCs and Fortune 500 companies across sectors Technology Technology Financial Services Financial Services Diversified Diversified Accenture Wipro Barclays BNY Mellon Amazon Qualcomm Cognizant IBM Thryve UBS Fiserv Allstate Worley Parsons L&T AMD Nvidia B.A. Continuum Axis
Slide 17: Diversified Portfolio of Marquee Tenants
Diversified Portfolio of Marquee Tenants Top 10 tenants contributing 36.4% (Sep 22) vs. 37.2% (Sep 21) Diversified tenant mix across sectors Top 10 tenants Gross Contracted Rentals contribution (36.4%) (1) (1) % split by Gross Contracted Rentals % of total Gross Contracted Rentals # of parks Accentu
Slide 18: Lease Expiry Profile
Lease Expiry Profile Only 4-5% of portfolio is coming up for expiry each year over next 3 years Over 75% of expiries re-leased during H1 FY23 Track record of achieving Re-leasing spread across parks Area Expiry (msf) Area Re-leased (since Apr 19) msf Rent at Expiry (INR psf) 57.4 67.1 63.7 Average 2
Slide 19: Projects Updates
03 Projects Updates mindspacereit.com 19
Slide 20: Gearing for Demand Resurgence (1/2)
Gearing for Demand Resurgence (1/2) Mumbai Region Pune Mumbai Region Mindspace Airoli West Commerzone Kharadi Mindspace Airoli West (B9) (B5) (Data Center) ▪ Leasable area: 1.1 msf ▪ Leasable area: 0.7 msf ▪ Leasable area: 0.3 msf ▪ Status: Façade, Entrance and ▪ Status: Façade, Entrance Lobby ▪ Sta
Slide 21: Gearing for Demand Resurgence (2/2)
Gearing for Demand Resurgence (2/2) Pune Hyderabad Mumbai Region Perspective Perspective Perspective Commerzone Kharadi Mindspace Madhapur Mindspace Airoli East (B4) (1A-1B Re-development) (High Street Retail and F&B ) ▪ Leasable area: 1.0 msf ▪ Leasable area: 1.3 msf ▪ Leasable area: 0.05 msf ▪ Sta
Slide 22: Mindspace Madhapur, Hyderabad – Upgrade
Mindspace Madhapur, Hyderabad – Upgrade Integrated “Business Ecosystem” with various on-site facilities and amenities Elevated Boardwalks for Ease of Movement – Phase 1 – Completed Vantage Café - Well spread F&B spaces across the Park Recreational Spaces for tenants Entrance Lobby & Amphitheatre Upg
Slide 23: Acquisition Update – The Square Avenue 98 (BKC Annex)
Acquisition Update – The Square Avenue 98 (BKC Annex) Shareholders of Sundew RE(1) have expressed their interest to sell 100% equity shares to Mindspace REIT Project Details Project Images Building 2B + G + 8 configuration Leasable Area 155,150 sf Leasing Status 100% leased Tenant Global Financial I
Slide 24: ROFO Update - Commerzone Raidurg
ROFO Update - Commerzone Raidurg(1) Project Images Project Details Total land area 9.07 acres Land ownership Freehold Leasable Area 1.82 msf 2 B + 2 Stilt + 1 G + 20 Configuration office floors Completion Occupancy certificate Status received in April 2022(2) Fit-out status Tenant fit-out in progres
Slide 25: Financial Updates
04 Financial Updates mindspacereit.com 25
Slide 26: Key Financial Metrics
Key Financial Metrics Delivered consistent growth on key financial metrics Revenue (INR mn) (1) NOI (INR mn) (1) 4,916 4,974 4,172 4,703 3,997 4,014 4,419 3,730 4,269 4,218 4,237 3,586 3,583 3,618 3,595 4,171 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY21 Q4 FY21 Q1 FY22 Q2
Slide 27: Low Leverage Offers Balance Sheet Headroom for Future Growth
Low Leverage Offers Balance Sheet Headroom for Future Growth INR 46,478 Mn 16.8 % INR 4,051 Mn 7.3 % 5.4 years Net Debt to Undrawn Committed Cost of Debt Net Debt Market Value (1) Wt. Avg. Maturity Facilities (p.a.) Well staggered maturity profile with 13.5% maturity by FY24 Diversified debt book wi
Slide 28: Stable NOI Growth Driven by Effective Cost and Revenue Management
Stable NOI Growth Driven by Effective Cost and Revenue Management Revenue from Operations (INR Mn) (1) NOI (INR Mn)(1) % of NOI Assets Q2 FY22 Q2 FY23 H1 FY23 Q2 FY22 Q2 FY23 H1 FY23 Q2 FY23 Mindspace Airoli (E) 844 918 1,860 698 693 1,401 17% Mindspace Airoli (W) 510 625 1,190 359 434 836 10% Minds
Slide 29: NDCF Build-up
NDCF Build-up Particulars (INR Mn) Q2 FY23 Revenue from Operations(1) 6,810 Property Taxes & Insurance (163) Other Direct Operating Expenses (2,475) Net Operating Income (NOI) 4,172 Property Management Fees (119) Net Other Expenses (221) EBITDA(1) 3,832 Cash Taxes (Net of Refunds) (413) (2) Working
Slide 30: Price Performance & Unitholding
05 Price Performance & Unitholding mindspacereit.com 30
Slide 31: Price / Volume Performance & Movement
Price / Volume Performance & Movement (1) Price movement of Mindspace REIT since listing Stock Symbol – NSE : Mindspace; BSE : 543217 (Nifty : +52.5%) (Mindspace REIT: +32.5%) (FTSE : +1.7%) (MSCI : +1.6%) Sep 22 Offer Price INR 275 p.u. Price on listing date INR 304 p.u. 6.9% Distribution yield (2)
Slide 32: Unitholding Pattern as on Sep 2022
Unitholding Pattern as on 30 Sep 2022 Unitholding Summary INR 21,601 Cr 37 % Market Cap (1) % Free- float 593 Mn units Unitholding Pattern (Market Cap : INR 21.6 Bn) (1) Insurance MF NIIs 1.1% 9.6% NPS 0.1% 0.1% Sponsors & Sponsor Public AIFs Group (Others) 0.6% 63% 37% FIIs 43,565 22.0% Total Unith
Slide 33: Market Updates
06 Market Updates mindspacereit.com 33
Slide 34: Mumbai Region Key Updates
Mumbai Region Key Updates Grade-A Office Stock 9M CY2022 Worli-Lower ▪ Micro-markets like BKC & Annex, Thane Belapur Road, and Thane 9.9% Parel Malad-Goregaon witnessed strong net absorption in 9M 12.9% 2022 Others ▪ Rentals in select good quality Grade A developments with 16.7% Grade A landlords ha
Slide 35: Hyderabad Key Updates
Hyderabad Grade-A Office Stock 9M CY2022 Supply, net absorption and vacancy trend analysis Micro-Markets: Madhapur Supply Net Absorption Vacancy Madhapur 62.0% Others 8.0 7.4 7.5 12.0% 11.4% 10.0% 2.1% 7.0 10.0% 6.0 6.6% Stock Peripheral 5.0 4.5 4.7 4.8 8.0% 87.5 msf East 4.0 3.7 3.8 4.0 3.6 3.7 6.0
Slide 36: Pune Key Updates
Pune Grade-A Office Stock 9M CY2022 Supply, net absorption and vacancy trend analysis Micro-Market(1): SBD East Others 10.7% Supply Net Absorption Vacancy PBD West 3.0 9.0% 22.5% 2.6 8.3% 8.0% 8.0% 2.4 2.3 2.5 2.1 7.0% 5.1% 5.9% 1.9 5.6% Stock 2.0 6.0% 1.6 1.6 1.5 5.0% 63.3 msf 1.5 1.3 3.5% 1.2 1.2
Slide 37: Chennai Key Updates
Chennai Grade-A Office Stock 9M CY2022 Supply, net absorption and vacancy trend analysis Micro-Market(1): South-West Others Supply Net Absorption Vacancy 22.7% (1) 3.0 16.0% South-West 2.5 14.3% 14.0% 26.4% 2.5 11.0% 12.0% Stock 2.0 8.6% 10.0% 1.6 59.6 msf 1.5 7.1% 4.6% 1.4 8.0% 0.9 6.0% 1.0 0.8 0.6
Slide 38: Value Creation via ESG
07 Value Creation via ESG mindspacereit.com 38
Slide 39: Key Achievements and Awards
Key Achievements and Awards Awarded British Safety Council's 47 prestigious 9 ‘Sword of Honour’ Green across 7 parks Buildings Construction Week Awards 2022 Real Estate Company of the Year (West) Mindspace Business Parks REIT CREDAI’s – >22.3 msf Awards CREATE Awards 2021 Total “Green & ‘Best Commer
Slide 40: Awards / Certification Received During the Quarter
Awards / Certification Received During the Quarter mindspacereit.com 40
Slide 41: Our Commitment to Build an ESG Centric Ecosystem
Our Commitment to Build an ESG Centric Ecosystem India’s first real estate entity to Signatory of EV100 Initiative Value creation for tenants join RE100 initiative through engagement activities Durgam Cheruvu Lake Added additional floor in Great place to work Makeover, Hyderabad Govt Hospital for CO
Slide 42: ESG Activities During the Quarter
ESG Activities During the Quarter Sreeja Akula, Common Wealth Games Winner being felicitated by Shrawan Kumar Gone, representing Mindspace Business Parks REIT, at the launch of #MindspaceForAthletes, a Sports Fellowship for Gen-Next Sports Talent mindspacereit.com 42
Slide 43: Shaping the Future Minds of our Nation
Shaping the Future Minds of our Nation Community School at Gambhiraopet, in partnership with the State government • Mindspace Business Parks REIT has contributed to the development of a new School in Gambhiraopet, a quaint village in Sircilla district of Telangana • Designed to accommodate 400 child
Slide 44: Tenant Engagement Activities
Tenant Engagement Activities Engagement initiatives, designed to build Camaraderie mindspacereit.com 44
Slide 45: Focus On High Corporate Governance Standards
Focus On High Corporate Governance Standards Strong governance framework complemented by partnership with leading institutional investors Mindspace REIT: Top-Notch Standards Six Member Board / Independent • Two-Third independent directors on the Board Chairman • Manager can be removed with 60% appro
Slide 46: Annexure
08 Annexure mindspacereit.com 46
Slide 47: Mindspace REIT Structure
Mindspace REIT Structure Unitholders Investment in Distribution Mindspace REIT Investment Manager Trust Trustee K Raheja Corp Mindspace Business Axis Trustee Services Investment Managers Parks REIT Limited LLP SPV: K Raheja IT SPV: Avacado SPV: Mindspace SPV: KRC SPV: Horizonview SPV: Intime SPV: Su
Slide 48: Portfolio Summary
Portfolio Summary 24.9 msf of Completed area with Committed Occupancy of 86.9% & WALE of 6.8 years Total Committed WALE on Leasable Completed UC/Future Occupancy In-place Rent Asset Occupancy area Area Area (msf) Area (msf) (%) (INR psf) (%) (years) (msf) Mindspace Airoli East 6.8 4.7 2.1 86.3% 88.2
Slide 49: Breakup of Lease Expiry Profile
Breakup of Lease Expiry Profile Q3-Q4 FY23 FY24 FY25 Area % of Gross Rent at % of Gross Rent at Area % of Gross Rent at Asset Area Expiring Expiring Contracted Expiry Contracted Expiry Expiring Contracted Expiry (msf) (msf) Rentals (INR psf) Rentals (INR psf) (msf) Rentals (INR psf) Mindspace Airoli
Slide 50: Balance Sheet as on 30 Sep 22
Balance Sheet as on 30 Sep 22 Balance Sheet (INR Mn)(1) 30-Jun-22 30-Sep-22 Notes Sources of Funds 1. All numbers are prior to minority Total Equity 1,63,085 1,60,967 adjustment Sub-Total 1,63,085 1,60,967 2. Other Liabilities primarily include Trade Liabilities Payables, Capital Creditors, Retentio
Slide 51: Debt Maturity Schedule as on 30 Sep 22
Debt Maturity Schedule as on 30 Sep 22 Principal Repayment Undraw Interest Wt. Avg. Description Fixed/ Total Principal n Rate Maturity FY29 & (INR Mn) Floating Facility O/S Facility (p.a.p.m.) (Years) H2 FY23 FY24 FY25 FY26 FY27 FY28 Beyond Total At REIT Level NCD (Tranche 1) Fixed 2,000 - 2,000 6.4
Slide 52: De-risked Portfolio with ~92.1% Completed Assets
De-risked Portfolio with ~92.1% Completed Assets Project wise Market Value breakup (1) Market value (INR million) Market value (%) Asset Completed Asset Under-construction/ Total Gross Under-construction/ Completed % of Total Value Value Future Development Asset Value Future development Mindspace Ai
Slide 53: ROFO Assets to Add Further Scale And Growth
ROFO Assets to Add Further Scale And Growth Strong pipeline spread across Mumbai Region, Chennai and Hyderabad Perspective Current Hyderabad | 1.8 msf 3 currently Commerzone Raidurg identified assets Status: • 1.8 msf pre-leased (1) • Tenant has started fit-out work in the premises • OC received 8.6
Slide 54: Research Houses Covering Mindspace REIT
13 Research Houses Covering Mindspace REIT Research House Analyst Email Id Ambit Capital Karan Khanna karan.khanna@ambit.co Axis Capital Samar Sarda samar.sarda@axiscap.in Bank of America Kunal Tayal kunal.tayal@bofa.com CITI Research Atul Tiwari atul.tiwari@citi.com Credit Suisse Lokesh Garg lokesh
Slide 55: Key Definitions
Key Definitions Asset SPVs Collectively, Avacado, Gigaplex, Horizonview, Intime, KRIT, KRC Infra, MBPPL and Sundew Occupied Area + Committed Area Committed Occupancy (%) Completed Area Committed Area Completed Area which is unoccupied but for which letter of intent/ agreement to lease have been sign
Slide 56: Thank You
Thank You Investor Relations Enquiries: Kedar Kulkarni (Finance & Investor Relations) Email id: ir@mindspacereit.com mindspacereit.com 56
Mindspace Business Parks REIT — Q2 FY23 Earnings Presentation on 6ix