Mindspace REIT raises ₹650 crore from IFC via sustainability linked bonds

Mindspace Business Parks REIT becomes first Indian REIT to issue sustainability-linked bonds; The bonds are issued for seven years, the company said.

Listed real estate firm Mindspace Business Parks REIT on June 25 announced that it has raised a ₹650 crore sustainability linked bond from International Finance Corporation (IFC), the private sector arm of the World Bank Group.

Mindspace REIT raises ₹650 crore from IFC via sustainability linked bonds.

The company will use the fund mainly to refinance existing loans, the company said in a regulatory filing.

The coupon of the bond is linked to Mindspace’s commitment to achieve certain ESG targets towards building a greener eco-system, the company said in a statement. The coupon of these bonds is fixed in nature, and shall be stepped down, in a staggered manner, based on achievement of the set targets.

These bonds are issued for a tenure of 7 years.

Mindspace REIT is sponsored by the K Raheja Group. It has a portfolio of 33.2 million square feet comprising 26.3 million square feet of completed area. Mindspace REIT has undertaken certain ESG targets critical to its operations. These include reduction in GHG emissions (Scope 1, 2 and 3), increasing the share of green certified area for existing buildings (under operations and maintenance), and reduction in energy intensity.

"We are thrilled to announce another significant milestone in our sustainability journey as we become the first Indian REIT to issue sustainability linked bonds. International Finance Corporation fully subscribed to this issuance. This follows our maiden green bond issue in March 2023," said Ramesh Nair, CEO, Mindspace Business Parks REIT.

"Our purpose to 'build sustainable ecosystems' helps us create long-term value for stakeholders, blending financial success with the environmental and social benefits," Nair added.

Commenting on the partnership with Mindspace REIT, Wendy Werner, IFC Country Head for India said, "We are pleased to partner with Mindspace REIT for its maiden sustainability-linked bond. IFC's investment will help Mindspace enhance the sustainability of its portfolio of business parks and reduce greenhouse gas emissions year-on-year."

"This partnership aligns with India's net-zero ambitions and demonstrates the viability of climate finance in the real estate sector. Our support aims to attract more diverse and long-term funding at a time when private capital is critical to build a greener, more resilient future," Werner added.

Mindspace Business Parks REIT in January 2024 had announced its collaboration with IIT Bombay for a research project centered on Climate Risk Assessment. As a pilot project, it had set up on-site weather stations at Mindspace Airoli West in the Mumbai Metropolitan Region.