Mindspace REIT's acquisition value-accretive, says Nuvama; retains 'Buy'

Analysts at Nuvama Institutional Equities remain positive on Mindspace Business Parks REIT (MREIT) following its move to acquire three prime CBD assets totaling around 0.8 msf—two in Mumbai and one in Pune—from its sponsor, for an enterprise value of ₹2,920 crore.

 

Terming the transaction value-accretive, Nuvama analysts Parvez Qazi and Vasudev Ganatra have reiterated their ‘Buy’ rating on the REIT, with a DCF-based target price of ₹507, in line with its Q2FY28E NAV. The brokerage expects MREIT to clock a 12 per cent DPU CAGR over FY25–28E, aided by healthy office demand.

 

“On a pro forma basis, the acquisition can enhance MREIT’s portfolio size to 39 msf and increase FY26E NOI by 9 per cent and DPU by 1.7 per cent. MREIT plans a preferential issue of units worth ₹1,820 crore to the sponsor group. The REIT’s LTV ratio will increase marginally from 24.2 per cent to 24.7 per cent,” the analysts wrote in a research note.

 

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Strengthens presence in MMR and Pune

The brokerage noted that MREIT will acquire three prime CBD assets for ₹2,920 crore from K Raheja Corp. This includes a preferential issue of 39.2 million units at ₹464.64 per unit, aggregating to ₹1,820 crore.

 

The assets comprise Ascent in Worli, Mumbai— a 0.45 msf property with 86 per cent committed occupancy; a fully leased 0.1 msf office building in Kalyani Nagar, Pune; and The Square Avenue 98 in Kalina (BKC Annex), Mumbai, a 0.2 msf asset that is also fully leased.

 

All assets, analysts said, are operational and income-generating, with significant mark-to-market (MTM) upside. They expect the proposed acquisition to be completed by Jan-26E.  ALSO READ | Nomura sees re-rating potential in Indian Banks; Axis, ICICI, SBI top picks

Marquee assets to enhance value

Nuvama highlighted that Ascent is located in Worli, one of Mumbai’s prime office micro-markets, with a vacancy level of just 6 per cent. The area has recorded a 7 per cent rent CAGR between 2019 and 9MCY25. Completed in CY25, the asset offers notable MTM potential, with in-place rents at ₹302 per sq ft versus prevailing rates of ₹300–350 per sq ft. Management expects rent commencement on 73 per cent of the area by end-FY26E and 86 per cent by Jun-26E, with the remaining vacancy likely to be leased by Apr-26E.

 

Similarly, The Square Avenue 98 carries in-place rents of ₹197 per sq ft, a WALE of 2.1 years, and 40 per cent MTM potential, supported by limited availability of office space in BKC and adjoining markets. The company also has the scope to expand this asset by 62,000 sq ft. The Pune property is leased to WeWork and has a WALE of 6.8 years.  ALSO READ | Voltamp Transformers gets 'Buy' call from Nuvama; 29% upside seen

NOI- and DPU-accretive

Nuvama estimates that the acquisition will expand MREIT’s portfolio to 39 msf, generating NOI of ₹2.3 billion (₹230 crore). It will also lift the REIT’s GAV by 7.6 per cent, from ₹41,000 crore to ₹44,100 crore, while keeping leverage largely stable, with LTV inching up to 24.7 per cent.

 

“The acquisition is expected to drive 9 per cent NOI growth and 1.7 per cent DPU accretion, increasing the contribution of the front-office portfolio to 7.9 per cent,” the analysts said. 

(Disclaimer: Target price and stock/sector outlook has been suggested by Nuvama. Views expressed are their own.)