Mindspace REIT aims for 50% increase in net operating income in four years

Mindspace Business Parks Real Estate Investment Trust (REIT) is aiming for a 50 per cent jump in its net operating income over the next three to four years, a senior official said on Monday.

This is an organic growth in the NOI, courtesy of a planned expansion programme, which will see it deploy over Rs 4,200 crore to add another 8 million square feet of area, the officials added.

"Our NOI will grow by Rs 900-1,000 crore in the next three to four years," its chief financial officer, Preeti Chheda, said.

The trust's current NOI - which is a key metric tracked by all as it represents the actual performance - is Rs 2,000 crore.

Chheda said the company, which is celebrating the completion of five years since listing, has a portfolio of 30 million sq ft at present, and another 3.5-4 million sq ft under construction. Apart from that, it has plans to add another 4 million for which permissions are awaited from the authorities.

Construction on the new projects will begin in the next 12-18 months, she added.

With the tech sector and global capability centres forming a bulk of the business, the company's managing director and chief executive, Ramesh Nair, said it does not expect any impact because of ongoing shifts in trade policies or even with the fast-paced adoption of artificial intelligence.

An internal analysis said it will be much cheaper to do work out of India for its clients even if the US were to slap a 50 per cent tariff on Indian services exports, he said, citing a slew of independent reports to claim that AI will not impact job creation in India.

Highlighting the cost advantage offered by India, which has a sizeable population of talent and the advantages that await tech companies and GCCs, he said the entry-level salaries have not moved much beyond the Rs 3.5-4 lakh bracket.

Tech majors' shifts in opting for building their own offices are also not a threat, he said, pointing out that it takes up to 5 years to build a space, while leasing it out from a REIT can be done within months, and client requirements can be fulfilled.

Additionally, in the case of multinationals, building a campus by yourself also exposes a foreign company and its top executives to the vagaries of the real estate sector in India, Nair said.

The share of Indian corporates in the overall NOI has doubled to 25 per cent over the last five years, he said, adding that a bulk of domestic companies eye space in Mumbai suburbs, such as Airoli, while the other locations where it operates, including Pune, Hyderabad and Chennai, generate higher interest among multinationals, especially ones in the tech sector.

Chheda said there is a need for regulatory changes to attract more funds into REITs, including increasing the caps on insurance and pensions companies to invest in the sector and also converting a company structure into a trust structure.