Mindspace Business Parks REIT convened an analyst meet between June 02 and June 03 where the company reiterated its strategy and business outlook for its office assets.
The analyst meet highlighted that the management of Mindspace REIT is focusing on office leasing, low-density offering, and ESG.
The management expects to close the transaction for their Hyderabad asset (1.8 mn sq.ft, 100 percent pre-leased) in the coming two months. The asset stands 100 percent completed, with rentals expected to start from Aug-Sept 2022.
Management indicated that the existing tenants have started asking for incremental space to accommodate their incremental hiring. Also, global captive companies continue to look towards improving the office experience for their employees and hence are looking to consolidate their working spaces with higher spending on fit-outs.
Brokerages broadly positive
Brokerage firms have positive views on the stock. ICICI Securities has an 'add' call on the stock with a target price of ₹367, citing key risks to its call are a further rise in vacancies across assets and a fall in lease rentals.
ICICI Securities highlighted that the overall portfolio physical occupancy which was 23 percent in April 2022 has improved to 30-35 percent in May 2022 and is expected to cross 60 percent by September 2022 barring any fresh Covid related disruptions.
The REIT manager expects portfolio occupancy levels to cross 90 percent by end of FY23 or the first half of FY24 on the back of renewed occupier interest for larger sized deals (committed occupancy stood at 84.3 percent as of March 2022).
ICICI Securities expects office leasing in India to see a strong pick up in FY23E as physical occupancy across offices ramps up in excess of 50 percent (25 percent currently).
"With the REIT having nearly 43 percent of tenants in the technology domain along with smaller verticals such as financial services and telecom/media consisting of global in-house captives, we believe that the REIT is well poised to benefit from a pickup in office leasing. Currently, the REIT’s top ten occupiers contribute nearly 36.5 of the gross overall rental income as of March 2022," said ICICI Securities.
Kotak Securities also has an 'add' call on the stock with a target price of ₹365.
"We view Mindspace REIT as a medium risk, reasonable dividend yield investment with dividend payouts growing at 10% CAGR between FY2022 and FY2025E. We have assigned a value of ₹255 bn for the operational as well as under-construction assets of Mindspace REIT," said the brokerage firm.
Disclaimer: The views and recommendations made above are those of individual analysts or broking firms and not of MintGenie.
