Retain ‘purchase’ on Mindspace REIT with TP of Rs 358

MREIT reported H1FY21 income and Internet Working Earnings (NOI) of Rs 7.9 billion and Rs 6.6 billion at a wholesome NOI margin of 83.8%.

Mindspace Enterprise Parks (MREIT) delivered a resilient efficiency in H1FY21 with workplace rental collections of 99% and income/NOI of Rs 7.9/6.6 billion at a wholesome NOI margin of 83.8%. The REIT has a stabilised rent-yielding workplace portfolio unfold throughout Hyderabad, Mumbai Metropolitan Area, Pune and Chennai. With 89% dedicated occupancy and in-place lease of simply Rs 54/psf/month, we like the corporate given 16% NOI CAGR over FY20-23E, a resilient leasing cycle for workplace belongings in India’s tier I cities and low leverage of 0.2x web debt/fairness which leaves headroom for injection of latest belongings within the REIT portfolio. We retain our ‘purchase’ ranking on Mindspace REIT with an unchanged March 2022 DCF based mostly goal value of Rs 358/unit. At CMP of Rs 305, we estimate NDCF yield of ~7% over FY22-23E of which over 90% is estimated to encompass tax-free dividends.

MREIT reported H1FY21 income and Internet Working Earnings (NOI) of Rs 7.9 billion and Rs 6.6 billion at a wholesome NOI margin of 83.8%. The REIT has reported resilient rental collections of 99% in H1FY21 (according to different listed friends) and has achieved gross leasing of 1.0 msf throughout the identical interval. The one dampener was early exits of 1.0 msf throughout the REIT’s portfolio (0.7msf for FY21E and 0.3msf for FY22E) that are over and above the expiries of 1.8msf every in FY21-22E. The REIT supervisor attributes this to tenants relocating to their very own campuses (Deloitte and Capgemini). Of the overall expiries of two.5msf in FY21E (together with early expiry of 0.7msf), the REIT has re-leased 0.6msf with one other 0.8msf of lease renewal dialogue at a complicated stage.

MREIT’s H1FY21 reported income/NOI are 47% and 51% of our FY21E estimates, respectively and we retain our FY21-23E estimates.

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