Mindspace Business Parks REIT (NSE: MINDSPACE) Q1 2026 Earnings Call dated Aug. 04, 2025
Corporate Participants:
Unidentified Speaker
Govardhan Gedela — Investor Relations
Ramesh Nair — Chief Executive Officer and Managing Director
Preeti Chheda — Chief Financial Officer
Analysts:
Unidentified Participant
Pritesh Sheth — Analyst
Jatin Chopra — Analyst
Abhinav Sinha — Analyst
Vasudev Ganatra — Analyst
Harshvardhan Kayan — Analyst
Presentation:
operator
Ladies and gentlemen, good evening and welcome to the conference call for Q1 FY26 financial results for Mindspace Business Parks REIT. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the initial remarks from the management. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchdown phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Govardhan Kadela, head Corporate Finance. Thank you. And over to you sir.
Govardhan Gedela — Investor Relations
Thank you. Good evening everyone and thank you for joining the earnings call for quarter one financial year 26 of Mindspace Business Parks REIT. At this point we would like to highlight that the management may make certain statements that may be forward looking in nature. Please be advised that our actual results may differ materially from these statements. We do not guarantee these statements or results and are not obliged to update them at any point of time. I would now like to welcome our CEO and MD Mr. Ramesh Nair and CFO Ms. Preeti Cheddar who will take you through the business update and the financial performance during the quarter.
We’ll then open the call to a round of Q and A. I’ll now hand over the proceedings to Ramesh. Over to you, Ramesh.
Ramesh Nair — Chief Executive Officer and Managing Director
Thank you, Govardhan. Good evening everyone and thank you for. Joining us on the call today. I’m pleased to report another strong quarter for Mindspace reit. Our results demonstrate our robust performance during the quarter. We have been beneficiaries of favorable trends in the Indian commercial real estate and our performance highlights our REIT’s ability to capitalize on this positive trend and also grow. Let me start with the overview and. Outlook of the industry. India’s office market like you have seen. Has been breaking records quarter on quarter over the last couple of years. Despite global uncertainties. Net absorption for calendar year H1 2025 hit an all time high of 24 million square feet. Vacancies across most micro markets today is in single digits. Rents rose in every city with core. Micro markets leading this upswing. Global occupiers want grade A green certified. Campuses and are willing to pay top dollars for them. I’d like to share some highlights from. Various IPC and other reports.
JLL reported that India’s gross leasing hit nearly 40 million square feet in CY H1 2025. This is up 17.6% year on year. Despite global challenges. Global firms drove 61% of leasing reinforcing India’s role as a talent and operations hub. TBRE in the meantime highlighted a 63% short run quarter and 27% year on. Year jump in new supply. It added that GCCs absorbed 36% of space with BFSI driving 44% of all GCC LED leasing.
I also noticed from the Cushman and Wakefield report that there’s been a 250 basis point quarter on quarter drop in vacancy in MMR region down to 11.2%. Much of this driven by BFSI clients. The Cushman report also spoke about how average Hyderabad citywide rentals have increased 15% year on year with Madhapur driving the appreciation. Gastipoli continues to offer a cost advantage with rents being 25 to 30% lower than Madhapur. Niles bank also noted that Mumbai’s prime office rents rose 7% year on year and I was checking the CRE Matrix report which said that Navi Mumbai’s office. Demand rose 40% in 2024.
On the key announcements for quarter one FY26 we delivered strong Roth leasing of 1.7 million square feet. In Q1 FY26 our portfolio’s committed occupancy increased to 93.7%. This is the highest since listing. Our NOI grew by 24.2% year on year to 616 crores. Last quarter we had reported 539 crores and this quarter it’s grown to 606 crores. This is again the highest growth since listing. We delivered a strong distribution growth for the quarter at 18% year on year. TPU grew by nearly 15% year on year to 5.79 per unit. Five out of 11 assets have a committed occupancy of 100%.
Two more parks our occupancy is more than 97%. Mindspace Iron west now stands at 92% occupancy crossing 90% occupancy for the first time ever since the demarcation rules came out in December 2023. Aeroli west occupancy has increased from 72% to 92% and overall occupancy of Aeroli has gone up from 76% to 85%. Lease rentals have also grown and the new deals happening at around 70 rupees in Aeroli. This offers this upside to capture rental growth. Our focus now lies on Aeroli east with our new high street retail offering called Mindspace Fusion becoming operational. This public facing retail destination will bring lots of new energy to the park.
We are also awaiting one final approval. To begin the Hotel development within the same campus. With ongoing upgrades, Aeroli east will become an even more attractive destination for occupiers. In terms of our operating and growth highlights, as mentioned earlier, we recorded GROSS Leasing of 1.7 million square feet. We delivered a re leasing spread of 29.5%. This is the highest since listing. We achieved healthy growth in rentals across our micro markets especially Madhapur Hyderabad in place rent today stands at 73 rupees per square foot per month for the entire portfolio. GCCs account for a healthy 55% of our portfolio occupancy foreign MNCs excluding GCCs another 20%.
Three out of our four companies in our park is either a GCC or an mnc. Our teams are actively working on an under construction pipeline of around 3.7 million square feet. On the portfolio growth front, as you are aware, strengthening our portfolio through strategic acquisitions remains a priority. We have successfully entered Hyderabad Financial district with a 512 crore value accretive acquisition of Q City.
This is a 0.8 million square feet office asset. We acquired 100% equity shareholding in Maxoftech Private Limited. We are rebranding this to the Square 110 financial district. This is our first third party acquisition outside our portfolio park and the asset is spread across 6 acres. This expands our Hyderabad portfolio to over 16 million square feet. The acquisition happened at a discount of 11.6% to independent valuations. That provides us a strong foothold in an emerging micro market financial district again poised to benefit from the supply saturation and motherhood. It is fully aligned with our strategy to strengthen presence in existing markets.
We managed to acquire this as a very attractive cap rate of 9.9%. This transaction highlights the embedded value of the asset and supports sustained growth. Further, the asset also offers a redevelopment opportunity in the near to medium term. Hyderabad Financial District has matured. It’s emerged as Hyderabad, like all of you know, is already one of India’s most vibrant GCC hub is home to over 350 global capability centers and it’s also the country’s fastest growing ecosystem for. Tech and BSSI innovation.
This is fueled by a deep talent pool and very progressive state policy. The city continues to attract marquee global occupiers and the financial district, once a government led vision has evolved into a premium business corridor. There is expressway connectivity, there is expanding Metro access, there is world class infrastructure. Also global leaders like Amazon, Google, Apple, Microsoft, Infosys, wipro, tcs, Honeywell all have. Anchored in this micro market as demand. Shifts from zones like High Tech City, Hyderabad’s Western corridor is firmly positioned for the next decade of GCC growth.
This transaction is fully aligned with our REIT strategy of disciplined expansion within our core micro markets. Over the last six months we have grown our portfolio size by over 4.3 million square feet. This is through a judicious mix of organic and inorganic growth strategies. Organically we successfully constructed and leased 1.3 million square feet. Our inorganic growth strategy again included acquisition of a sponsor Rofo of 1.8 million square feet, a large external third party asset of 800,000 square feet, and consolidation within our park of 400,000 square feet.
Mindspace REIT again on the development side we have stayed aligned with our development pipeline. We continue to roll out strategic portfolio wide upgrades. This is aimed at boosting rentals and increasing tenant satisfaction. These are feedback driven initiatives based on surveys, audits and tenant feedback. Capital is being deployed to modernize assets and enhance occupier retention. We enhance our urban green zones and open areas for a better experience on each of our projects. At Mindspace Iowa east we launched Mindspace Fusion, our retail and FMB Hub. At Mindspace IoT east, this is growing into a vibrant zone home to around 22 retail outlets.
Some other popular brands that will be hosted include Barbecue Nation, Game Ranch Radio Bar. It is open to public and is strategically located on the Thane Bella Food Road. This is designed to enrich the daily experience of professionals working in Mindset east and West. It will also serve the wider Navi Mumbai population. Also building 1, building 9, 10, 11 and 12 and the clubhouse are currently in the design phase for planned upgrades and this will include upgrades of arrival. Lobbies, landscaping and hazards. We are also planning terrace level posts and recreation amenities and it’s being planned. In multiple buildings in the campus.
At Mindspace I don’t invest we are planning for upgrades in Building 2 and Building 3 and also the Central Food Court. Currently this is at the design stage at Mindstate Madhapur. Within our 10 million square feet park we have only 273,000 square feet of vacancy following the exit of a major Healthcare NMC tenant at sub 50 rentals. We successfully released the space to a global consulting firm at 95 rupees per square feet. So from 50 to 95 this demonstrates our ability to capture significant mark to market upside across our assets. The Pearl Club, our Experience center and high end club is on track for Q3FY26 completion.
Building redevelopments are underway with B1 which is our 100% pre leased ready for handover by Q1FY27. Building V8 follows suit in Q4FY27 and are also on track. Three enhancements are underway with a focus on infrastructure and ambience at Gera Commerce Zone Karadi, our multipurpose amenities center. Rewire those officially launched conveniences like a full fledged gym, learning suites, nap pods, indoor game zones all are part of revive. Uptake is strong and our tenants use the space very regularly. Last quarter we delivered R2 building to a VCC client. Fit outs are underway. We reviewed R2 to capture best practices and learnings which we will use in future projects.
At Commerce Llerwada, B7 is undergoing a phased lobby refresh. Work is progressing as per schedule. Facade and lobby upgrades are being planned for buildings B2, B3, B4 and B6. Building B1 is set for enhancements including a new food court, lobbies and facade upgrades. Refurbishment of the entrance portal is scheduled to commence soon. Plans are underway for terrace amenities and a revitalized central recreational garden. Shared outdoor zones are also being updated with enhanced features and design. All enhancements are focused on creating a livelier, more immersive campus experience for our. Tenants and their employees. On the customer centricity side, we introduced a new MEP retirement policy to standardize all future property upgrades. We assess all assets to ensure they’re benchmarked globally and nationally.
Upgradation of key MEP systems is underway to ensure seamless operations and experience. We also added indoor sports, SMB outlets, pharmacies and convenience stores across our parks. Prioritizing Safety for women we have launched several safety measures across our portfolio. We also hosted our first client ESG Advisory Committee session in Pune. With this we let our clients go on the ESG mission with us. It’s a very good participation and was very well appreciated.
We also consciously invested in tenant experience tech. Recent third party survey results including our NPS and CSAT have been positive. We have conducted an NPS NET Promoter Score Survey and a CSAT Customer Satisfaction survey across our portfolio. External third party client surveys include 172 clients out of 178 of occupier clients and 200566 employees offer tenants. This is further reiteration that we focus on non monetary goals. This gives us valuable feedback and ability to implement interesting initiatives for our clients. We further made Progress on our H23 hotelization initiatives across our portfolio. These are basically a set of 23 measures designed to bring a hotel like experience in our office park.
We executed 16 successful B2C events across six parks attracting thousands of employees to. Come and bar to space. To ensure client convenience, we have enhanced focus on design and space planning. Lobbies have been revamped into vibrant breakout zones with indoor games, music corners and cafe seating. Upcoming additions include terrace amenities, clubhouses and covered walkways for an enhanced experience. Smart digital signages are now live and sync to the Mindspace app for seamless engagement we launched a fourth ESG report for FY25 of the Mindspace REIT. We received the prestigious VE5 star rating for several buildings in Mindspace Malapur, Hyderabad. This rating again reflects a strong focus on energy efficient building performance. Our performance in key KPIs including green certification, energy intensity and GHG emissions has now been fully third party assured and we remain on track to meet all targets.
TUV conducted a reasonable assurance audit of our BRSR code disclosures. They also conducted a limited assurance for our ESG report. This independent review reinforces the credibility and transparency of our sustainability reporting. In conclusion, some of the concerns that were highlighted over the last few quarters and how they are being addressed Last quarter global uncertainties from the west posed concerns, yet our performance reflect the business’s strong resilience to global uncertainties. Cost of debt has reduced from 8.15% to 7.84% this quarter. This is aided by our proactive refinancing. Efforts and rate cuts.
Last quarter in place rent growth again was slow but we have increased it. Was slow in the overall market but we have increased IT go up from 71 to 73 this quarter. Navi Mumbai vacancy which was a key concern before today Mindspace I only west stands at 92% occupancy. Leasing SEC spaces was a challenge we closely monitored a while back. As of June 30, 69% of our NPA converted space is successfully leased signaling strong recovery. Before I conclude, I’d like to share an update on our new board member. Mindspace REIT is delighted to welcome Mr.
Sandb Matrani to the Board of the Manager. A veteran of more than three decades in US REITs, Mr. Matrani has led some of the sector’s most prominent platforms, having served as the CEO of General Growth Properties GGP who is also the Global CEO of REWORK and also Vice Chairman of Brookfield Properties Retail Group. Mindspace REIT will benefit from its extensive experience with large scale REITs in the US. His valuable global insights will help us drive forward and help us with our growth strategy. This further strengthens our board which now comprises six independent directors out of ten.
In conclusion, we have had yet another great quarter. Renting out over 1.7 million square feet, we have achieved a committed occupancy of 93.7%. Our NOI grew by a robust 24.2%. Driven by our rising rents and growing occupancy, we delivered a strong quarterly distribution of 352 crores. Up 18% year on year. We remain confident in the long term prospects of our portfolio. Supported by the strength of our high quality assets, tenant relationships and leasing strategy. Our commitment to strategy, acquisitions and consistent development progresses positions us for sustained growth. Over the long term. At Mindspace reit, we continue to build loud workspaces and maximizing value. Thank you all for your time. I will now hand it over to Preeti for further financial updates of the quarter.
Preeti Chheda — Chief Financial Officer
Thank you, Ramesh. Good evening everyone. I’m pleased to present the financial results for the quarter ended June 30, 2025. We delivered yet another quarter of robust operating and financial performance. Our NOI for Q1.26 grew 24.2% YoY to INR 6.2 billion. Even on a like to like basis. Excluding the impact of the ROPO acquisition of Commerce zone Raidur, Hyderabad, NOI group stood at a healthy 18.3%. Reflecting the strength of our organic performance. Revenue from operations for Q1FY26 increased by 21.4% year on year to INR 7.5 billion. We recorded 18% YoY growth in distributions for Q1FY26 totaling INR 3.5 billion.
Our DPU grew 14.9% YoY to INR 5.79 per unit. Yet again, if we exclude the impact of the RUFA acquisition, the the DPU growth was still a healthy 11.2%.
operator
Ladies and gentlemen, the line for the management has been disconnected. Please stay connected while we reconnect the line for the management. Thank you. Ladies and gentlemen, we have the line for the management reconnected. Yes, ma’. Am. Please go ahead.
Preeti Chheda — Chief Financial Officer
Yeah, I’m sorry about this disconnection. So I just repeat myself on the distributions. We recorded a 18% YoY growth in Q1 which totaled 3.5 billion. Our DPU grew 14.9% Bio Y to 5.79 per unit. Yet again, if we exclude the impact of LOFA acquisition, the DPU was still a healthy 11.2%. This double digit growth was primarily driven by the strong operating performance. As Ramesh mentioned, During the quarter we completed our first external acquisition outside our existing park. The asset was acquired for 5118 million which we funded out of debt. We did this acquisition at an attractive pricing implying a cap rate of 9.9% on stabilized NY.
Including this, we have now completed inorganic acquisitions of 3.1 million square feet, taking our total portfolio size to 38.1 million square feet. We will continue to explore external acquisition opportunities that align with our investment philosophy and growth Strategy. As of June 30, 2025, our LTV was low at 25%. To this, even if we add the debt taken for QCT acquisition after the quarter end, our LTV still remains a comfortable level of 26% providing enough headroom for future growth. Our cost of debt reduced by 30bps during the quarter to 7.84% PATM. This was led by one refinancing of debt of Hyderabad ROFO asset and second reduction in interest rates for both existing borrowings and refinancing pursuant to reduction in policy rates.
During the quarter we raised INR 14 billion through CPS as well as NCD Insurance, both at competitive interest cost. With interest rate softening, we will work to convert some of our existing variable cost borrowings to fixed cost borrowings to help lock in lower coupons for longer tenures. Our strong development pipeline within the portfolio renting of vacant spaces in aeroli growing rentals at our parks which provide us with better MTM opportunity Strong ROFO pipeline Third party acquisitions as we may undertake going along falling interest rates. All of these will aid the growth of NOI and GPU going forward for minescreen.
With this I hand over the call to the operator to open the floor for questions. Thank you.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star then one on their touchstone phone. If you wish to remove yourself from the question queue you may press star then two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles again. To register for a question please press star when one our first question comes from the line of Pritesh Sheth from Access Capital. Please go ahead Pritesh sir, your line is unmuted.
Please proceed with your question.
Pritesh Sheth
Yeah sorry. So thanks for the opportunity. First question is on the Q City acquisitions so the committee documents right now is around 64 65% by when can one assume the leasing to reach 90% plus that we any see in our Madhapur asset. So some thoughts on that and again a second one. So congrats for our first third party acquisition going ahead. How should we see this is more of an opportunistic or we are already seeing some more pipeline, you know so as to see one acquisition every year. Yeah, that would be my first two questions.
Thank you.
Ramesh Nair
Actually Pritesh, great question. I think this is actually a mix. Of core value added and opportunistic investment style. Core obviously we’re getting a 9.9% cap rate value add because there is opportunity. To kind of upgrade the facility and opportunistic because there is huge redevelopment opportunity. This is a market where developers have. Done 7, 8, 9 FSI and here. On a 6 acre land we just. Have 800,000 square feet. So eventually in the medium term there is redevelopment opportunity in terms of we believe we should be able to fill this up in the next 15 to 15, 18 months. What you should keep in mind about this micro market is Hyderabad today has an office absorption of around 8 million. Square feet per square feet.
This is a net absorption growth is even more so three years 8 million square feet. That’s 24 million square feet of market absorption. 80% of this happens in Madhapur, the. High tech city which is 20 million square feet. But if you look at the next three years, the supply in Madhopur thanks to buildings like ours D1 getting pre leased there’s only 2.5 million square feet coming. So clients would be forced to look at other micro markets within Hyderabad and that’s where we believe that financial district will see interest. We have to fill roughly 2.5 to 3 lakh square square feet which we are comfortable that we will fill it. Over the next 15 odd months. So that’s the place. So there is all three core value. Add and opportunistic opportunity here in this essay.
Pritesh Sheth
Sure. And on the question of how frequent these third party acquisitions going to be, is it hard to find a third party opportunity in the market currency or there are lot many
Ramesh Nair
Pritesh has been. Participating in third party. Obviously we should ideally target one every year. But also actively looking at row force. Which we are continuing to look at. So it’s a good mix of organic and inorganic.
Pritesh Sheth
Got it. And on the redevelopment opportunity in this asset, you know how would we avail that? I mean we have to like demolish tower and then rebuild it or there’s a vacant land parcel where we can utilize this. So how, how those things are,
Ramesh Nair
there. Are two towers here. One is a bigger tower and the other is the smaller tower. Out of 8 lakh square feet, 6. Lakh is a bigger tower and there. Is a 2 lakh square feet tower over a period. Not the time to start demolishing now. Over a period. If we can move some of those tenants from the shorter tower to the bigger tower, we could redevelop that. And given the location dynamics, I feel. That would be good for that new D.
Pritesh Sheth
Okay. Okay, sounds good. And just one last on the draw four side. When can we. I mean. Right, done. You know, when are we thinking of adding up next set of assets in the pipeline? Especially ultimate for some comments on that. Yeah.
Preeti Chheda
So pritesh, we wouldn’t be able to immediately comment on the timelines. It also of course depends on when we receive the notice from the sponsor. So we’ll have to wait and explore that as we go along.
Pritesh Sheth
Sure. Okay. That’s it for my side. All the best.
Preeti Chheda
Thank you.
operator
Thank you. Our next question comes from the line of Jatin from Bank of America. Please go ahead. Jatim. Sir, your line is unmuted. Please proceed with your question.
Jatin Chopra
Sure. I’m sorry, I was on mute. Thanks for taking my question. My first one Ramesh, is you give a very interesting perspective of how demand supply is sort of looking like for mothapur for the next two, three years it looks like demand is significantly expected to be higher than supply. Would you think that this market has an opportunity to sort of see rental growth of let’s say much higher than the typical 4, 5% that you see. And also that particular market in general industry level occupancies are still in the 80, 85% range. How are you seeing rental growth for that particular market?
Ramesh Nair
So Hyderabad is a market where I haven’t seen this kind of. I’ve been tracking the market for more than 22, 23 years. What we saw last year, close to a 20% kind of increase. I’ve never seen that kind of rental increases in Malapur high tech city market. Now that there is no space available. One thing you should also remember is in high tech city Madhapur market there’s not even one acre left for new development. So whatever ones are two, three of our competing developers, whatever they do, plus what we do building needs. There’s absolutely no land available because of. Which we believe rental increases would increase in financial district. The two data points which I talked about in my speech is our vacancy.
In Aerody West Gigaplex used to be. Our occupancy used to be 72%. That’s become 92%. 72% in December 2023 just before the demarcation laws came up. And our overall occupancy has gone up from 75 to 85%. Also very happy to report that we’ve done a couple of deals at. You may remember that this market was. Stuck in the late 50s and early 60s for a long time. I’m very happy that we’ve done a. Good domestic cooperation and a very good Multinational Corporation at 70 rupees which we believe would increase rentals in this market. We have two, three competitors also around this market and they’ve also kind of. Reached more or less, very less vacancy. Which kind of gives us the opportunity. To push up rentals in Aerole also.
Jatin Chopra
Perfect. Thank you so much. That was insightful. The second one that I had was more of a bookkeeping question on slide number nine of your presentation. FY26 expiries that you’ve broken down 2.2 million square feet into 1.5 and 0.7. Where does one fit in the early termination of 0.9 million square feet? That’s footnote number three because the exits that you’ve sort of mentioned are lower than that 0.9 million square feet. So just trying to reconcile those two numbers. Thank you.
Ramesh Nair
So Jatin, if you look at what we have done from 2.2 million square feet of expiring, we expect to retain 1.5 million square feet of this 2.2 million square feet. And out of this 1.5 we have actually already retained 9 lakh square feet. So that’s already happened. So 2.2, 1.5 we expect to retain 7 lakh is going to exit out of this 7 lakh exit. We already released 2 lakh square feet out of 7 lakh, which leaves us with 5 lakh square feet. And I also spoke about some in Hyderabad where a global healthcare major vacated a space where they were paying less than 50 rupees rental and we managed to lease it at 95 rupees to another global consulting major.
So there are those kind of opportunities coming in. I only have opportunities where 50s, early 50s, they’re getting opportunities at late. So these kind of opportunities, I wouldn’t worry too much about people exiting and expiry because I think that’s a big. Opportunity to get tenants at higher speed. One trend which we also saw was some of our tenants doing early renewals where their leases were coming up for expiry next year. But they did early renewals now. So that also comes into as part of this 2.2. So they may not be actual expiry but people proactively doing expiries to Give us a longer lease period today than. Waiting for next year.
Jatin Chopra
Thank you so much Ramesh. Thanks a lot. That’s all from me.
operator
Thank you. Before we take the next question, a reminder to all the participants. You may press Star then one to ask a question. Our next question comes from the line of Abhinav Sinha from Jefferies. Please go ahead.
Abhinav Sinha
Hi and great to see the strong numbers now being reflected. A couple of questions. One on the operations side. Where do you see the iron rentals in say another couple of years?
Ramesh Nair
I think iron will definitely go up. I have tracked that market quite a bit. We don’t see much of competition at least in the next three, four years coming in that market. And I really. Everybody knows about all the infrastructure initiatives which the government has put in. I think if you look at the country there wouldn’t be so much of infra being put in. What’s happening in Navi Mumbai right from the airport and the Atal Setu and all those infrastructure initiatives which is incidentally there are a good meeting with midc, the new CEO last week and they’re talking of making Nabi Mumbai into a global GCC destination like Hyderabad. So the right government intent, the right infrastructure. I had spoken about this a little early in terms of how Navi Mumbai.
Out of 10 parameters and 8 parameters. Navi Mumbai ranks in the top 3. KPMG had done this study again. Cushman and Wakefield has again rated Navi Mumbai very high from a GCC destination point of view. Home supply. We calculated Mumbai is tough to find homes in Mumbai. But in the 10 kilometer radius of. Nabi Mumbai we’re talking 140,000 new homes which are under construction. So many positives which is driving so infrastructure cost. Where do you find space today at 70 rupees in India the BSSI talent. Which is there in eastern suburbs, Namib. Mumbai Thane, safety wise, traffic wise, quality of living wise, all those opportunities are. There in Navi Mumbai. So bullish on Navi Mumbai Abhinav but tough to put a number. We have seen the rentals go from early 60s to touch 70 now hopefully. I’m sure it will go up further.
Abhinav Sinha
Right Sir, a few questions. So firstly on the acquisition that we are doing, what is the sort of say upgrade capex that one can expect in the next 12 odd months there?
Ramesh Nair
So the next 12 months we are planning to spend around 210 crores on upgrades.
Preeti Chheda
You’re talking about Q City.
Abhinav Sinha
Yeah, Q City. Yeah.
Ramesh Nair
For Q City we are still discussing. It’s going to be between 40 to 50 crores is what we are planning right now.
Abhinav Sinha
Okay. And when you talk about redevelopment potential, I mean what are we looking at?
Ramesh Nair
Redevelopment potential is 3x plus. What is there today? Today we have a 8 lakh square feet building on a 6 acre plot. This could easily in the medium term, if we decide to redevelop, become a. 25 lakh square feet kind of.
Abhinav Sinha
Okay, so on the. So we have had a strong start to DPU growth. Also this year I think X of Raidor we were at about 11%. Right. So is that a sustainable play pace? You know say high single double digit number for the remainder of the year or you think this is more of a one off.
Preeti Chheda
So Abhinav, we don’t have one off this quarter but I won’t be able to put a number. But I can say it will be healthy going forward. And for multiple reasons. One, of course the NOI growth has been strong and we are hoping that will continue for various reasons. As we’ve already discussed, with interest rates also softening, we will get the benefit of interest rates also. So therefore we believe that going forward BPO growth also should be healthy. Now obviously you could have quarters of some working capital being positive, negative, that could happen. But for the year as a whole we believe we should see LDPU growth.
Abhinav Sinha
Okay, where should we see the year ending on net debt? I mean sorry, on the cost of.
Preeti Chheda
Debt to more downside from here I would say another 25 to 30 bits we should be able to get. We’ll try for more But I believe 25, 30 bits reduction is something I would expect.
Abhinav Sinha
Okay, great. Thank you.
Preeti Chheda
All right, thank you.
operator
Thank you. Our next question comes from the line of Vasudev from Nuama. Please go ahead.
Vasudev Ganatra
Yeah. Hi. Thank you Ramesh for the detailed opening commentary. Just two questions. More relating to the numbers front in terms of denotification. Now can you help me? How much area have we already demarcated and how much is in pipeline? And also the split of vacancies between SEV and non seg in terms of area and percentage if it’s possible.
Ramesh Nair
In terms of SEs and demarcation, we. Have received demarcation approval of around 2.3 million square feet. Of this 2.3 million square feet, 1.6. Million square feet is already being leased. That’s close to 70%. 3, 350,000 square feet in Aeroli east and 200,000 square feet in Madhapur. We’re targeting to get it demarketed over the next few months. So that’s the update on demarcation. And good news is Cray vendors process. Started last year early calendar last year they were still concerns about paperwork, how much to pay, all that. But today all this has become very seamless. The government has been highly supportive and there are times when we have done demarcation in like 45 days. So. Process is very smooth and we are able to do that and we don’t. We proactively have done it. There are times when clients tell us just hold on to a thesis space also. So we keep kind of keep it on hold for clients who want Etsy Systems.
Vasudev Ganatra
Okay. And in terms of committed occupancy HSTC we’ve already reached about 93.7%. So by the end of the year will it be around these levels or we can see any further improvements as well.
Ramesh Nair
Objective is to take it to around 95% by end of this financial year. It’s a large portfolio. You’ve seen our portfolio size increasing all the time. So we’ve crossed the 37 million square feet mark. So there will be some amount of. Space which is coming up for churn every quarter and after that we’ll try and push it up. But the objective is right now is to stay focused to reach the 95% mark.
Vasudev Ganatra
Okay. And just one last from my side on this financial district acquisition that we’ve seen overall, if we see the macro level vacancies in this micro market are increasing. So just wanted to have your thoughts on that and what kind of rental increase can be seen this asset in the near to midterm.
Ramesh Nair
The financial district today has around 30. Million square feet of stock. Institutional stock in that is around 10 million square feet. So if you look at non institutional stock which has a lot of startups sold sold to HNIs, that vacancy level. Numbers are very high. But if you look at institutional, that vacancy is only 17%. India vacancy itself is around 16 17%. So one thing you need to look at is 80 to 90% of all. Leasing is done by the six international property consultants. And typically international property consultants advise their clients to go into institutional ownership. And no better name than Mindspace REIT. From an institutional point of view. So you need to look at it from a status. I have seen this in Delhi a.
Few years back when I was tracking Gold coast extension market there was a. Year, I think it was 2018 or 19 where vacancy level in golf course extension was 62% but vacancy for institutional was like 3%. So we see those trends across markets that are top 10 developers, institutional developers. In the country who will have lower. Vacancy tough to put a rental increase number. But like I mentioned before, 80% of the demand goes to high tech city Marapur. But that market just doesn’t have. We are not going to see companies tomorrow saying I don’t have space in Hyderabad. When we go to Chennai or a Bangalore, they would say let me go. To a micro market which is 20 minutes away. And that’s where we believe we will benefit.
Vasudev Ganatra
That. Thank you.
operator
Thank you. Before we take the next question, a reminder to all the participants. You may press star and one to ask a question. Our next question comes from the line of Tanvir an investor. Please go ahead.
Unidentified Participant
Yeah, hi. Thanks for taking my question. My question is to Preeti. So this time I can see that the distribution composition is slightly changed. We have less of dividend coming in and more of capital return. Now I just wanted to understand and please explain me if I’m wrong. The way this works is that the trust is giving out capital in the form of equity and debt to the SPVs and like yourself, the other peers, REITs and invids that are there, they are reporting interest component along with return of capital and a few more parameters. But I just wanted to understand that.
Is it that the trust has absolutely not given out any debt to any of the SPVs and that is why we are not having any interest component or there’s another reason altogether.
Preeti Chheda
Okay, so first of all there is debt which has been given. But what happens is in our case the cost at which we are borrowing versus the cost at which we are lending to the SPVs. There’s not too much of gap between the two. Therefore you’re not seeing much coming out by way of interest. So that’s one. That doesn’t mean we are not giving loans from the REIT to the sv. That of course is there. And in fact that’s one reason why you are having this amortization of loan or return of capital as you might call part of that coming.
And also to the first part of your question, generally the composition does change depending on the SPV. Now for example, when we are buying newer SPVs, if these SPVs are newer SPVs and they have more debt as compared to older SPVs where data got paid down and so on and so forth, then obviously the component of amortization of loan or return of capital gets higher, dividend is lower, it happens over a period. So therefore you’ve seen some change to the composition mix as compared to what you saw earlier years.
Unidentified Participant
Okay, that’s Fair enough. So but when you’re saying that we, if we have given out debt to STVs, when it is coming back, it is coming back as return of capital. I mean that is blended with the interest of what is that understanding? Correct on my part.
Preeti Chheda
No. So interest is coming as interest to the interest will come as they are not blended return of.
Unidentified Participant
Correct, exactly.
Preeti Chheda
Coming there. So that is fine. So in our case, the amount which we have lent for which we are taking out interest is a very small component as compared to the other.
Unidentified Participant
Okay, okay, okay. Okay, fine.
Preeti Chheda
Overall composition, therefore you’re not seeing a material amount because earlier we had the ROC component was much lesser. Therefore you saw in the overall mix the absolute amount has not materially changed, but it’s just that the other elements have come in and the base has increased. That’s why you are seeing this composition coming down.
Unidentified Participant
Okay. Ma’, am, the only reason is because when we as retail investors, when we are going to file income tax, this kind of is a little tricky because wherever we see TDS cut and interest component coming back, clearly in the distribution that you all give out on the email, we can easily say that, you know, that much is going to be taxed at the investor’s hand or whatever. And then return of capital is, you know, later on deducted from your overall buying and selling of shares or whatever. But then it becomes difficult to understand, you know, how this works when there is no interest component at all.
That’s why I was just asking on.
Preeti Chheda
On this you will definitely have some interest component. And at the end of the year when we are giving us your 64B, you will clearly have a bifurcation of how much of the distribution has come from each of the components. So there I don’t see you should have a challenge. But obviously we do have an interest component, though it’s relatively smaller than the other two.
Unidentified Participant
Okay. Okay, ma’, am, thank you so much.
Preeti Chheda
Pleasure. Thank you.
operator
Thank you. Our next question comes from the line of Harsh Kayan from Kayan Securities. Please go ahead.
Harshvardhan Kayan
Hi, so my question was regarding that consultation paper classifying probably REITs as equity in the next couple of months. It’s possible they already are talking about it. So in my understanding, I just wanted to know that how will it affect Mindspace, REIT and the REIT sector in general? Because logically the retail investor flow and there’s no participation in indexes, so the yield compression could actually really come down. So just wanted to understand how will it affect mindfulness in general from a financial point of view? Obviously it should not make any operational difference. Hello?
operator
Yes, I’m so sorry, just give me one moment. Yes ma’, am, Please go ahead.
Preeti Chheda
Yeah, could you just repeat the latter part of the question because we had some technical glitch cycle here. 30 seconds of what you said.
Harshvardhan Kayan
No, I was just talking about the equity classification of REIT and then I was saying that operationally but from a financial point of view a lot of obviously investors money would come into REIT which was not previously accessible. It’s more of an institutional product right now. So I just wanted your opinion and understanding on how it would affect the sort of way Mindspace from a financial point of view, access to capital and the DEED sector in general and logically since you have such high value properties with probably 100% occupancy in one of your major like Madhapur and whatnot, so there should be a major yield compression logically going forward.
So I just wanted your thoughts on that.
Preeti Chheda
Sure. So firstly SEBI had floated a consultation paper on inclusion of REITs and invids into indices and of course classification also was one matter raised there. We have got comments from all stakeholders and now I think their internal deliberations are on. We don’t know what the outcome will be. We’ll have to wait and watch what the outcome will be. But assuming if we get included in the indices then obviously we believe that the liquidity will stand improved and with better liquidity obviously transaction costs go down, there’s better price discovery. So I don’t think it’s any specific rate but the sector as a whole stands to benefit when the liquidity improves.
Now whether that leads to any compression of yields etc. Difficult to comment, but liquidity is something which will definitely, definitely help because we’ll have passive money coming in because of inclusion in indices and since we are included in lot of global indices, you know there a good ask to have us included here also. But obviously it remains with SEBI want quality.
Harshvardhan Kayan
Thank you so much.
Preeti Chheda
Thank you.
operator
Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Ramesh Nair
Thank you everyone for joining. So it’s been an interesting quarter with you Cedini, which has also been accretive not just from an NOI perspective, but also from a GAV and NAV perspective. So overall good quarter from occupancy, from NOI growth, distribution growth. And thank you for joining.
Preeti Chheda
Thank you everyone.
operator
Thank you on behalf of Mindspace Business Parks reit. That concludes this conference. Thank you for joining us and you may now disconnect your lines.