New Delhi, July 24 -- Mindspace Business Parks REIT (real estate investment trust), sponsored by K Raheja Corp, on Thursday said it has completed the acquisition of an office park asset in Hyderabad, marking its maiden third-party acquisition.

The REIT acquired the commercial asset, Q-City, located in Hyderabad's Financial District, for Rs 511.8 crore (around $59 million). Mack Soft Tech Private Limited, a subsidiary of Irish firm Quinn and which was undergoing insolvency proceedings between 2011 and 2019, is the seller.

The sponsor K Raheja Corp's board approved a resolution to complete the acquisition through Horizonview Properties Private Limited, an asset SPV (special purpose vehicle) of Mindspace REIT. Following the acquisition, the asset will be called 'The Square, 110 Financial District'.

"Securing the property at a 11.6% discount to an independent valuation and an attractive c. 9.9% cap rate, demonstrates our disciplined capital deployment and commitment to long-term value for unitholders. This is how we grow - strategically, selectively, and with conviction," Ramesh Nair, the chief executive and managing director of Mindspace Business Parks REIT said.

This acquisition of Q-City, spread across 0.81 million square feet, brings the REIT's Hyderabad portfolio to 16 million square feet, and marks its entry into Hyderabad's Financial District. The asset is currently about 65% occupied, and is expected to gain from the demand spillover from higher rentals in near-saturated markets such as Madhapur, where rentals have reached about Rs 90-100 per square feet.

The REIT will fund this acquisition through debt, it said without disclosing any details. Among its other debt fundraises, Mindspace REIT said in June that it is raising Rs 1,200 crore from International Finance Corporation (IFC), the World Bank Group's private-sector investment arm, by issuing non-convertible debentures (NCDs). The debt fundraise was aimed to help Mindspace enhance the sustainability of its portfolio of business parks and reduce greenhouse gas emissions year-on-year.

Prior to this, the REIT made its maiden green bond issue in March 2023. Its cumulative green and sustainability-linked financing as of June stood at Rs 1,860 crore, said Ramesh Nair, the chief executive of Mindspace REIT, had said.

The REIT was listed on the bourses in August 2020. At the time, it was backed by Blackstone. The private equity firm exited the REIT in January 2022.

The REIT has office portfolios in Mumbai, Pune, Hyderabad, and Chennai. The portfolio will increase to 37.9 million square feet from 37.1 million square feet earlier. This includes 30.8 msf of completed area, 3.7 msf of area under construction and 3.4 msf of future development. The portfolio consists of five integrated business parks and seven independent office assets.

Published by HT Digital Content Services with permission from VC Circle.