Mindspace Business Parks REIT के निदेशक की रिपोर्ट

Mar 31, 2024

The discussion and analysis of our financial condition and results of operations that follow are based on our Audited Consolidated Financial Statements of Mindspace REIT and the Asset SPVs (together known as ''Mindspace Group'') for the year ended March 31, 2024, prepared in accordance with Indian Accounting Standards and applicable REIT regulations.

Forward-looking Statement

This discussion contains forward-looking statements that describe our projections and expectations based on reasonable assumptions, past performance, and the projected movement of the global and Indian economy. Such statements can be generally identified by words like ''believe'', ''plan'', ''anticipate'', ''continue'', ''estimate'', ''expect'', ''may'', ''shall'', and other similar words. Such projections are subject to changes in risks and uncertainties related to the fluctuations in general economic and capital market conditions, including continued inflation, increasing interest rates, supply chain disruptions,

labour market disruptions, dislocation and volatility in capital markets, and potential longer-term changes in tenant behavior based on the severity and duration of any downturn in the India or global economy. No forward-looking statement that we make will be updated or changed by us regardless of new information, upcoming events, or other factors.

All the financial numbers in this section have been rounded off to the nearest million unless otherwize stated.

Mindspace REIT Overview

Mindspace REIT specializes in the development and management of dynamic Grade A integrated business campuses, standalone office buildings, and state-of-the-art data centers. With a strategic presence across key office submarkets in the Mumbai Region, Hyderabad, Pune, and Chennai, Mindspace REIT offers a diversified portfolio encompassing five integrated business parks and five high-quality standalone offices. It holds one of the largest Grade A office portfolios in India with a total leasable area of 33.2 msf (26.3 msf completed; 4.4 msf under construction and 2.5 msf future development).

Mindspace REIT embraces the philosophy of ''Wellness at Work'', cultivating a growth-oriented environment by offering curated amenities and green spaces that promote physical fitness, mental well-being, and work-life balance. Our parks stand out for their energy-efficient buildings and eco-friendly designs that encourage tenant engagement initiatives, thus making us the preferred partner for diversified tenants.

Tenant Profile

Our diversified portfolio of marquee tenants spans across industries, ensuring stability and resilience. This helps mitigate risk and enhances the overall strength of our portfolio.

With over 220 tenants, each contributing to the vitality of our parks, Mindspace REIT maintains a diversified tenant base. From industry giants like L&T, Barclays, BA Continuum, IDFC and Hitachi Energy to new-age firms such as Smartworks, our tenant roster reflects the trust and confidence placed in us by leading organizations.

Mindspace REIT continues to prioritize tenant partnerships through initiatives such as ''Table Talks''. Alongside this, our dedicated in-house facility management division ensures seamless operations, while our regular tenant engagement activities facilitate meaningful interactions and encourage feedback. Moreover, our commitment to creating green spaces and offering diverse amenities indicates our dedication to tenant well-being and enhancing their overall experience within our properties.

Charting Occupancy Growth Outlook

During FY24, Mindspace REIT demonstrated agility through its leasing prowess, securing leases for 3.6 msf of space. Across all our assets in Pune, BKC, and Malad, occupancy is nearly at full capacity, with almost 100% committed occupancy. Further more, our portfolio has rebounded impressively, achieving pre-COVID occupancy levels of c.96% in Madhapur, and c.99% in Airoli (non-SEZ). 6 out of 9 parks (excluding Mindspace Pocharam) have achieved committed occupancy of more than 96% as of 31 March 2024.

Capitalizing on the robust demand across our markets, we are proactively converting units in SEZ spaces to Non-Processing Areas (NPA). We have received the approval for converting c.0.4 msf to NPA. To address the escalating demand for Airoli Non-SEZ space, we have additionally filed for c.1.5 msf conversion to NPA. The transition to NPA entails certain costs, yet we view it as a strategic necessity to bolster occupancy rates and transform vacant spaces into revenue-generating areas.

Driving Portfolio Growth through Organic Development

With a positive outlook in the GCC office space demand, domestic companies'' growth and the return to office, which is anticipated to bolster near to medium-term demand, we are strategically introducing supply in our micro-markets. We are developing projects of c.4.4 msf of total leasable area. Notable projects in the pipeline include redevelopment buildings at Mindspace Madhapur (c.3 msf), Building No. 4 at Commerzone Kharadi (1 msf), and a data center building at Mindspace Airoli West (0.3 msf), among others. Further, a mixed-use development (office and hotel) of c.0.8 msf is planned for development at Mindspace Airoli East Park. The hotel portion of the mixed use development is pre-leased to Chalet Hotels.

Enhancing our Offerings with ‘Amenitized’ Workplace

Our asset-enrichment endeavors include several initiatives aimed at enhancing the overall experience within our properties. These include the implementation of revitalized lobbies, expanded open spaces, and the addition of amenities within both buildings and parks. To enrich the dining and recreational offerings, we are incorporating well-distributed food and beverage spaces, revamping facades, utilizing energy-efficient lighting, installing signage, and integrating

wall art. Our ongoing efforts include the development of an Experience Center, spanning c.130,000 sq ft, to cater to various lifestyle and business needs, and a modern club facility with top-notch amenities. Furthermore, the mixed-use development at Mindspace Airoli East, featuring over 250 keys and approximately 0.5 msf of office space, promises convenience and comfort for both occupants and visitors, thus elevating the park''s appeal.

FY24 - Business and Performance

Mindspace REIT continued to remain resilient and record stable growth despite global headwinds. We achieved organic growth through a comprehensive approach of leasing, redevelopment initiatives and park upgrades, as well as strengthening the balance sheet with prudent capital management for future growth.

Evolving Business Dynamics

India''s office sector is in a transformative phase, marked by the evolving dynamics of the modern workplace. The rising uptake of office space by domestic enterprizes, the expansion of Global Capability Centers (GCCs), and the government''s SEZ reforms will significantly influence the commercial real estate landscape in India. This multi-factor arena signifies heralding a new era of growth and opportunity.

Rising Leasing Trend - Domestic Occupiers

Domestic companies surfaced as a new catalyst for the surge in office space demand in India recently. Such growth may be attributed to rapid governmental capital expenditure, growing consumption and urbanization supported by favourable demographics. Colliers'' research suggested that during CY23, domestic companies accounted for half of the total leasing across the top six cities. It is anticipated that domestic firms will increasingly seek expanded office premizes to accommodate their expanding workforce and encourage collaboration, thereby amplifying the momentum within India''s commercial real estate sector.

Favorable GCC Landscape in India

Compelled by India''s growth story, the availability of an expansive talent pool, cost arbitrage and infrastructure upgrades in top cities, GCCs resumed their office leasing activities. Colliers'' research illustrated that in the second half of 2023, GCC leasing reached its highest point since 2020, with a total 12.4 msf across the top six cities in India.

Notably, other than dominant technology and BFSI GCCs, there is growing interest in engineering, manufacturing and healthcare which further diversify the landscape. In Hyderabad - an office micro-market in which Mindspace REIT holds a significant position in office leasing - there are over 180 GCCs. Colliers India GCC Report noted that c. 24% of pan India GCC leasing between 2020-23 was executed in Hyderabad, second to Bengaluru''s share of c.37%. Hence, with all favourable factors at play, we are actively leveraging our GCC leasing experience, and expanding our portfolio organically to meet the growing demand.

SEZ Reforms to Drive Occupancy Growth

The Indian Government''s Department of Commerce notified amendments in SEZ rules at the end of Q3 FY24. The amendments permitted the demarcation of part of an SEZ area into Non-Processing Areas after repayment of certain tax benefits. Before the amendments, organizations with SEZ space were limited to de-notifying only the land parcel from SEZ to non-SEZ status. This process necessitated the complete vacating of the entire built-up area over the specified land parcel before initiating de-notification. Consequently, SEZ spaces experienced a gradual tenant exit, resulting in a decline in occupancy levels.

Due to the SEZ reform, developers can now convert SEZ processing areas into SEZ Non-Processing Area (NPA), earning an exemption from SEZ compliance. Such floor-wize demarcation will help leasing activities to meet the growing demand for NPA spaces.

We proactively capitalized on the new regulations, having already obtained approvals for approximately 0.4 msf of NPA conversion. Moreover, we have filed for an additional c.1.5 msf of space for NPA conversion.

The Resurgence of Return to Office

In contrast to the trends abroad, return to office has gained significant momentum in India. This transition has been embraced not only by domestic enterprizes and entities within the BFSI sector but also by GCCs in the country. Several large Indian IT firms have shifted to a five-day working week within office premizes. Currently, physical occupancy rates within our parks stand at approximately 70%. The post-COVID era has underscored the importance of having ample office space with the right amenities to attract talent and foster team collaboration, thus enhancing creativity and productivity. This strategic approach also helps mitigate potential risks such as data privacy and security, legal and compliance risks, lack of cultural alignment and in-person training and mentorship opportunities.

Risks and Concerns

Risks and concerns affecting our operations are captured in section ''Risk Factors'' on page numbers 120 to 123.

Basis of Preparation of Consolidated Financial Statements

Please refer Basis of preparation stated in Consolidated financial Statements on page numbers 333 to 334.

Summary of Material accounting policies

Please refer Material Accounting Policiesstated in Consolidated financial Statements on page numbers 334 to 350.

Principal components of consolidated statement of profit and loss

Our revenue from operations comprizes the following sources:

(i) facility rentals; (ii) income from maintenance services; (iii) revenue from works contract services; (iv) revenue from power supply; and (v) other operating income.

Facility rentals

Revenue from facility rentals comprizes the base rental from our properties, income from car parking and others and certain Ind AS adjustments to reflect the impact of straight lining of leases and discounting of security deposits.

• Base rentals: Base rentals comprize rental income earned from the leasing of our assets

• Income from car parking and others: Primarily, includes income from car park, kiosks, signage, ATMs, promotional events, among others

Income from maintenance services

Income from maintenance services consists of the revenue that we receive or is receivable from tenants for the Common Area Maintenance (CAM) services provided as per the terms of agreement with the tenants, and also includes revenue from common area maintenance services provided to third parties, if any, located within the assets.

Revenue from works contract services

Revenue from works contract services includes revenue earned from providing the services of construction of building for the customer based on their specification and requirements pursuant to the works contract executed by KRC Infra with respect to the portion of land owned by the counterparty.

Revenue from power supply

Revenue from power supply includes income from supply of power to tenants within the notified SEZ as per the tariff regulations stipulated by Maharashtra Electricity Regulatory Commission (MERC).

Other operating income

Other operating income primarily includes (i) interest income from finance lease, which comprizes interest income from fit-out rentals where such leases are classified as finance leases. Leases are classified as finance leases when substantially all the risks and rewards of ownership is transferred to the lessee;

(ii) income from sale of surplus construction material and scrap; and (iii) service connection charges for power supply and other charges and (iv) any compensation received from customer.

Interest income

Our interest income comprizes the following sources: interest income on (i) fixed deposits with banks; (ii) electricity deposits;

(iii) income-tax refunds, and (iv) others.

Other income

Our other income primarily comprizes: (i) gain on redemption of investments; (ii) Liabilities no longer required written back, (iii) miscellaneous income.

Expenses

Our expenses primarily comprize: (i) cost of work contract services (ii) cost of power purchased (iii) employee benefit expenses (iv) Management Fees (v) other expenses (vi) finance cost (vii) depreciation and amortization expenses.

Cost of work contract services

Cost of work contract services is the expenses incurred towards construction of a building, based on agreed specifications and requirements, pursuant to the works contract executed by KRC Infra with respect to the portion of land owned by the counter party.

Cost of power purchased

Cost of power purchased is cost incurred for purchase of power, transmission charges and related expenses with respect to supply of power to tenants within the notified SEZ.

Employee benefits expenses

Employee benefits expenses primarily include salaries and wages, contribution to provident and other funds, gratuity expense, compensated absences and staff welfare expenses.

Management Fees

Management Fees is the fees paid to the Manager in relation to the services provided under the property management services (net of the employee expenses directly incurred by the Asset SPVs) and support services agreement.

Other expenses

Other expenses primarily comprize property tax, electricity, water and diesel charges, business support fees paid to the KRC Group entities, rates and taxes, corporate social responsibility expenses, assets written off/demolished and business promotion, repairs & maintenance, revenue share, miscellaneous expense and provision for unbilled revenue and advertizement expenses.

Earnings before finance costs, depreciation and amortization, regulatory income/expense, exceptional items and tax (EBIDTA)

We have elected to present earnings before finance costs, depreciation and amortization regulatory income/expense, exceptional items and tax as a separate line item on the face of the statement of profit and loss.

EBITDA is generally defined as netprofit beforeinterest expense, taxes, exceptional items, depreciation and amortization. However, Ind AS 114 (Regulatory Deferral Accounts) requires the movement in all regulatory deferral account balances to be

distinguished from other income and expenses. Hence, for the purpose of Consolidated Financial Statements, included in this Annual Report, net movement in regulatory deferral account balances has been disclosed separately in the Statement of Profit and loss after ''Profit before rate regulated activities and tax'' and thus does not form part of EBITDA.

Depreciation and amortization expenses

Depreciation and amortization expenses comprize the depreciation of property, plant and equipment; depreciation of investment property; amortization of intangible assets and amortization of right of use of assets.

Finance costs

Finance costs primarily comprize: (1) interest expenses on borrowings from banks and financial institutions, debentures, bonds, (2) unwinding of interest expenses on security deposits, and (3) other finance charges. We capitalize borrowing costs in relation to under construction properties. Once construction is completed, the interest cost is charged to statement of profit and loss, causing an increase in finance costs.

Regulatory income/expense

As a deemed power distribution licensee in the SEZ area, some of our Asset SPVs charge tenants tariff on power consumption that is pre-approved by the state regulatory authority, Maharashtra Electricity Regulatory Commission (MERC). Accordingly, as per the Multi-Year Tariff (MYT)

regulations, we file a tariff petition for the control period based on projected expenses and revenue during the period. MERC reviews the tariff petition and approves expenses and revenue in compliance with the tariff regulations. Subsequently, we submit our audited accounts to MERC to undertake a truing up process, wherein MERC compares the actual expenses and revenue with the approved expenses and revenue for the past year, and allows total revenue gap/(surplus) to be recovered in the succeeding years tariff. As a result, there is an increase/(decrease) in succeeding years tariff based on past years revenue gap/(surplus), and this change is referred to as impact on account of true-up. Such revenue gap/(surplus) for the past years is recorded as regulatory income/(expense) in the financials.

Tax expense

Tax expense comprizes: (1) current tax and (2) deferred tax charge (net)

The Indian Income Tax Act provides companies an option to discharge their income tax liability at a concessional rate of 25.17% (including cess and surcharge) subject to fulfilment of certain conditions which includes opting out of other applicable tax holiday claims/incentives/tax exemption and utilizing MAT credit (''New Tax Regime''). With respect to the Consolidated Financial Statements as of and for the year ending March 31, 2024, and for the year ending March 31, 2023, we have not opted for the New Tax Regime and continue to discharge our income tax liability as per the existing tax regime.

Comparison of financial numbers:
	FY24			FY23
	Amount (H million)	Share (%)		Amount (H million)	Share (%)
Facility rentals	17,995	74	5%	16,047	69.	9%
Maintenance services	4,392	18	2%	3,478	15.	2%
Revenue from power supply(1)	639	2.	6%	731	3.	2%
Revenue from works contract services	655	2.	7%	2,277	9.	9%
Interest income from finance lease	228	0.	9%	160	0.	7%
Sale of surplus construction material and scrap	125	0.	5%	83	0.	4%
One time Compensation	133	0.	O'' CO	186	0.	8%
Revenue from Operations®	24,167	100	0%	22,962	100.	0%
Cost of work contract services	710	2.	CO ''P o''-	2,181	9.	5%
Direct Operating Expenses	4,498	18	-P o'' CO	3,680	16.	0%
Net Operating Income®	18,959	78	4%	17,101	74.	5%
(1) Include Regulatory Income/(Expense) from the power business (2) Represents 100% of the SPVs including minority interest in Madhapur SPVs

Revenue from operations increased by 5.2% from H 22,962 million in FY23 to H 24,167 million in FY24. Excluding revenue from works contract services the Revenue from Operations grew by 13.5% y-o-y. The increase of in revenue from operations in FY24 primarily on account of:

• an increase in facility rentals by 12.1% from H 16,047 million to H 17,995 million primarily due to escalations, increase in rentals from mark to market opportunity and lease up of new and vacant area

• an increase in income from maintenance services by 26.3% from H 3,478 million to 4,392 million on account of increase in occupancy in our parks as well as increase in the expenses towards common area maintenance due to increase in physical occupancy as companies implemented back to office mandates

• One time compensation of H 133 million received from tenant in FY24 on account of termination of letter of intent / lease deed during lock-in period.

During FY24, we achieved

• Gross leasing of c.3.6 msf

• New and vacant leasing of c.1.1 msf

• Contracted lease escalations on c.3.6 msf area

• Re-leasing spread of 14.3% over 3.4 msf area (incl. releasing and vacant area leasing)

Direct operating expenses (excluding cost of works contract services) increased in line with the increase in revenue from operations and maintenance services. The NOI Margin excluding works contract services is 80.9%.

Movement in revenue from operations and NOI by assets:
	Revenue from operations (1) (2) (3)				NOI (2) (3)
Assets |	FY24 (I million)	FY23 (I million)	Variance	FY24 (I million)	FY23 (I million)	Variance
Mindspace Airoli East	3,879	3,779	3%	2,913	2,841	3%
Mindspace Airoli West	3,451	2,552	35%	2,544	1,805	41%
Mindspace Malad	975	885	10%	856	784	9%
The Square BKC	431	611(4)	-29%	405	588	-31%
Mumbai Region	8,736	7,826	12%	6,717	6,018	12%
Gera Commerzone Kharadi	2,235	1,653(5)	35%	1,567	1,398	12%
The Square Nagar Road	868	700	24%	667	540	24%
Commerzone Yerwada	2,011	1,813	11%	1,550	1,421	9%
Pune	5,114	4,166	23%	3,783	3,359	13%
Mindspace Madhapur	8,837	8,315	6%	7,469	7,192	4%
Mindspace Pocharam	66	80	-17%	28	47	-40%
Hyderabad	8,904	8,395	6%	7,497	7,239	4%
Commerzone Porur, Chennai	723	265	173%	530	136	290%
Facility Management Division	1,424	1,134	26%	430	350	23%
Inter Company Eliminations	(1,390)	(1,101)	26%	-	-	NM
Total	23,512	20,685	14%	18,959	17,101	11%

NM = not meaningful

1. Asset-wize revenue from operations are prior to inter-company eliminations

2. FY24 revenue and NOI is post including Regulatory Income/ (Expenses).

3. Represents 100% of the SPVs including minority interest in Madhapur SPVs

4. Includes one time compensation of H 186 Mn in FY23

5. Revenue in Gera Commerzone Kharadi is prior to revenue from works contract services

NOI came in higher at K 18,959 million in FY24 as compared to K 17,101 million in FY23 primarily due to following reasons:

• Mindspace Airoli East: Higher due to escalations over ~3.0 msf over FY23 and FY24 and higher power margin due to reversal of power income pursuant to MERC order in FY23, partially offset by exits

• Mindspace Airoli West: Higher primarily due to rent commencement from Building 10 and escalations on 1.7 msf in FY24

• Mindspace Malad: Higher primarily due to escalations in FY24

• Mindspace Pocharam Lower on account of exits of 0.2 msf in FY24

• Commerzone Yerwada: Higher primarily on account of increase in gross rent pursuant to escalations over 1.2 msf over FY23 and FY24

• The Square BKC: Lower on account of one time compensation of H 186 Mn received in Q3 FY23

• Commerzone Porur: Higher on account of increase in gross rent due to new area leasing of 0.8 msf over FY23 and FY24

• Gera Commerzone Kharadi: Higher on account of increase in gross rent due to new area leasing of ~0.6 msf, partially offset by higher works contract expense and revenue sharing provision in FY24

• The Square Nagar Road: Higher on account of new and vacant area leasing of ~0.3 msf over FY23 and FY24

• Mindspace Madhapur: Higher on account of vacant area leasing of ~1.6 msf and escalations, partially offset by exits of ~1.3 msf

• Facility Management Division: Additional NOI on account of higher CAM margin

Profit and Loss statement analysis
(I million)	For the year ended March 31, 2024 (Audited)	For the year ended March 31, 2023 (Audited)	% Variance
Revenue from Operations	24,292	22,821	6%
Interest Income	297	157	89%
Other Income	180	63	186%
Total Income	24,769	23,041	7%
Expenses
Cost of work contract services	710	2,181	-67%
Cost of materials sold	1	15	-93%
Cost of power purchased	793	817	-3%
Employee benefits expense	298	285	5%
Trustee fees	2	5	-60%
Valuation fees	6	7	-14%
Insurance expense	106	87	22%
Audit fees	26	25	4%
Management fees	599	565	6%
Legal & professional fees	161	180	-11%
Other expenses	4,079	3,279	24%
Total Expenses	6,781	7,445	-9%
Earnings before finance costs, depreciation and amortization, regulatory income / expense, exceptional items and tax	17,988	15,596	15%
Finance costs	4,566	3,431	33%
Depreciation and amortization expense	3,827	3,554	8%
Profit before rate regulated activities, exceptional items and tax	9,595	8,611	11%
Add: Regulatory income/ (expense) (net)	(8)	205	-104%
Add: Regulatory income/(expense) (net) in respect of earlier periods	(117)	(64)	83%
Profit before exceptional items and tax	9,470	8,752	8%
Exceptional Items	(364)	(1,368)	-73%
Profit before tax	9,106	7,384	23%
Current tax	2,084	1,895	10%
Deferred tax charge / (income)	1,410	2,404	-41%
Profit for the period/year	5,612	3,085	82%
Profit for the period/year attributable to unit holders of Mindspace REIT	5,250	2,836	85%
Profit for the period/year attributable to non-controlling interests	362	249	45%

Management Fees

Management Fees which is paid to Manager as a percentage of lease rent, license fees, car park charges, any other compensation and fitout rentals, increased by H 34 million in line with the increase in aforementioned revenue streams.

Other Expenses

Other expenses has increased from FY23 to FY24, primarily due to

¦ H 364 million increase in repairs & maintenance

¦ H 151 mn decrease in assets written off /demolished

Our consolidated revenue from operations and Profit for FY24 stood at H 24,292 million and H 5,612 million, respectively.

Cost of Work Contract Services

Cost of work contract services of H 710 million is the expenses incurred towards construction of a building for Gera Developments Private Limited in Gera Commerzone Kharadi, Pune.

Cost of Power Purchased

Cost of power purchased has decreased by H 24 milllion.

Employee Benefits Expenses

Employee benefits expenses primarily include salaries and wages, contribution to provident and other funds, gratuity expense, compensated absences and staff welfare expenses has increased by H 13 million.

• Business promotion expenses increase by H 102 million

• Revenue share provision of H 156 million

Financial Resources

As of March 31, 2024 our cash and cash equivalents stood at H 3,250 million. Cash and cash equivalents primarily consist of balances with banks in current accounts, deposit accounts with original maturity below three months and cash on hand. Our undrawn facilities stood at H 9,155 million. Our other bank balances and fixed deposits stood at H 4,430 million. We maintain a strong liquidity position consisting of cash and treasury balances.

Summary of cash flow statement
Particulars (I millions)	FY 24 Consolidated	FY 23 Consolidated
Net cash generated/(used in) from operating activities	15,265	13,930
Net cash (used in) / generated from investing activities	(14,587)	(7,506)
Net cash generated used in financing activities	(1,635)	(4,563)
Net increase/(decrease) in cash and cash equivalents	(957)	1,861
Cash and cash equivalents at the beginning of the period/year	2,843	982
Cash and cash equivalents at the end of the period / year (Net of book overdraft)	1,886	2,843
Cash and cash equivalents comprizes of
Cash on hand	3	3
Balance with banks
- on current accounts	3,195	3,176
- in escrow accounts	52	3
Deposit accounts with less than or equal to three months maturity	-	880
Cash and cash equivalents at the end of the period / year	3,250	4,062
Less: Bank overdraft	(1,364)	(1,219)
Cash and cash equivalents at the end of the period / year (Net of book overdraft)	1,886	2,843

In the upcoming financial year, there are 4 NCDs and MLDs at REIT and SPV levels to the tune of H 13.5 billion that are coming up for repayment.

Debt Maturity Schedule

Weighted average maturity of debt profile stands at c.5.2 years with 28.4% and 2.4% of debt due for repayment in FY25 and FY26 respectively.

Description	Fixed/	Total	Undrawn		Principal		Interest		Wt. Avg.		Principal Repayment
(I Mn)	Floating	Facility	Facility		O/S		Rate (p.a.p.m.)		Maturity (Years)		FY25	FY26	FY27	FY28	FY29	FY30 & Beyond	Total
At REIT Level
MLD	Fixed	3,750	-		3,750		6.5%		0.1		3,750	-	-	-	-	-	3,750
NCD (Tranche 2)	Fixed	750	-		750		6.6%		0.1		750	-	-	-	-	-	750
NCD (Tranche 3)	Fixed	5,000	-		5,000		6.3%		0.8		5,000	-	-	-	-	-	5,000
NCD (Tranche 4)	Fixed	5,000	-		5,000		7.9%		3.3		-	-	-	5,000	-	-	5,000
Green Bond	Fixed	5,500	-		5,500		8.0%		2.0		-	-	5,500	-	-	-	5,500
NCD (Tranche 6)	Fixed	5,000	-		5,000		7.7%		2.3		-	-	5,000	-	-	-	5,000
NCD (Tranche 7)	Fixed	5,000	-		5,000		7.9%		2.7		-	-	5,000	-	-	-	5,000
CP	Fixed	1,446	-		1,446		7.7%		0.2		1,446	-	-	-	-	-	1,446
NCD (Tranche 8)	Fixed	3,400	-		3,400		7.8%		3.0		-	-	3,400	-	-	-	3,400
At SPV Level
TL/LRD - MBPPL	Floating	12,830	1,912		8,853		8.5%		7.7		3,571	420	483	538	593	3,248	8,853
TL/LRD - Sundew	Floating	4,813	1,442		2,511		8.0%		11.9		151	169	184	213	234	1,561	2,511
NCD - Sundew	Fixed	4,000	-		4,000		6.1%		0.2		4,000	-	-	-	-	-	4,000
TL/LRD - KRIT	Floating	2,550	-		2,519		8.3%		11.7		92	112	152	176	208	1,779	2,519
TL/LRD - KRC Infra	Floating	9,690	-		8,554		8.4%		9.8		575	697	851	973	1,102	4,356	8,554
TL/LRD-	Floating	4,500	1,884		2,601		8.2%		13.4		43	62	89	122	174	2,111	2,601
Horizonview
TL/LRD - Gigaplex	Floating	3,300	950		2,031		8.4%		6.5		73	92	166	189	209	1,301	2,031
TL - Avacado	Floating	3,000	-		2,852		8.6%		10.3		99	118	145	178	201	2,111	2,852
OD/LOC	Floating	4,476	2,967		1,146		8.4%		8.6		283	21	23	25	27	766	1,146
Total	84,005		9,155		69,914		7.8%		5.2		19,833	1,691	20,993	7,416	2,749	17,233	69,914
Repayment (%)	l					I		I		I	28.4%	2.4%	30.0%	10.6%	3.9%	24.6%	100.0%

Cash Flow form Operating Activities

Net cash generated from operating activities for FY24 was H 15,265 million. Our profit before tax was H 9,106 million, which was adjusted for non-cash and items relating to financing and investing activities, primarily for finance costs amounting to H 4,566 million, depreciation and amortization expenses amounting to H 3,827 million. Our changes in working capital primarily comprized an increase in trade payables of H 379 million, an increase in trade receivables of H 530 million, a decrease in other inventories of H 28 million, increase in other non-current and current assets (including financial assets) of H 341 million, an decrease of other non-current and current liabilities (including financial liabilities) and provisions amounting to H 31 million. In addition, we paid direct tax (net of refund) of H 1,924 million.

Cash Flow from Investing Activities

Net cash used in investing activities was H 14,587 million for FY24, primarily comprising interest received of H 75 million which was primarily offset by expenditure incurred on investment property and investment property under construction, including capital advances, net of capital creditors, property, plant and equipment and intangible assets of H 10,832 million, primarily with respect to Mindspace Airoli West, Gera Commerzone Kharadi, Mindspace Madhapur (Sundew) and Commerzone Porur, and net investment in fixed deposits of H 3,873 million.

Cash Flow from Financing Activities

Net cash utilized in financing activities was H 1,635 million for FY24, primarily comprising proceeds from debt raized net of payment of H 15,107 million which was offset by finance costs paid of H 4,561 million, distribution to unitholders and dividend to Non-Controlling Interest holder (including tax) of H 12,107 million and expenses incurred towards the issue of nonconvertible debentures of H 61 million.

Capital Expenditure and Capital Investments

Capital expenditure comprizes additions during the financial year to property, plant and equipment, capital work-in progress, investment property, intangible assets and investment property under construction. During FY24, we incurred capital expenditure of H 10,832 million, primarily for the construction activity at Mindspace Airoli West, Gera Commerzone Kharadi, Mindspace Madhapur (Sundew) and Commerzone Porur and re-energizing out assets via upgrades and infrastructure upgrades. Our capital commitments (net of advances) as at March 31, 2024 was H 9,681 million towards construction and upgrade of our assets.

Liquidity and Capital Resources Overview

Our low leverage and robust credit profile offer adequate headroom for future growth.

For the year ended March 31, 2024, we,

• Raized H 14.9 billion in fixed cost debt from financial institutions at Mindspace REIT and via issuance of NCDs and CPs bearing coupon ranging between 7.67% to 7.95% on p.a.p.m. basis

• Repaid H 4.9 billion via issuance of variable coupon NCD at MBPPL level

• We successfully repaid H 2 billion worth NCD (NCD Tranche 1) on the maturity of the said debenture.

• We strategically increased our exposure to fixed cost debt to c.55.6% of our total outstanding debt.

• Debt raized during the year was predominantly used for refinancing existing debt and to fund capital expenditure

• Availed new loan sactions of H 9,850 Mn including Overdraft lines during FY24

Our weighted average cost of borrowings stood at 7.6% at the end of March 2023. It has increased by c.20 bps to 7.8% at the end of March 2024. The corresponding numbers for March 2022 and March 2021, were 6.6% and 7.1%, respectively. The Reserve Bank of India has hiked policy rates by 250 bps in the current cycle, however, we were able to limit the impact of hikes on account of strategic repayment of high cost debt, increasing share of fixed cost borrowings and negotiating with banks to lower spreads/ interest rates. All of these were possible on account of our AAA credit ratings profile, low leverage, robust financial performance and portfolio occupancy.

Corporate Rating for Mindspace Business Parks REIT: ''CCR AAA/Stable'' by CRISIL Ratings, ''[ICRA] AAA (Stable)'' by ICRA

MLD - Market Linked Debentures

NCD - Non-Convertible Debentures

TL - Term Loan

LAP - Loan Against Property

Note: As on March 31, 2024

• Credit Rating of J3.75 billion long-term principal protected market-linked debentures: ''CRISIL PPMLD AAA/Stable'' by CRISIL Ratings Limited

• Credit Rating of J 5.0 billion and J 4.0 billion non-convertible debentures at REIT level and SPV level, respectively: Dual ratings of ''CRISIL AAA/Stable'' by CRISIL Ratings Limited and ''[ICRA] AAA (Stable)'' by ICRA Limited for both facilities at REIT and SPV level. Both facilities are fixed rate in nature.

• Credit Rating of J 0.75 billion nonconvertible debentures at REIT level: ''CRISIL AAA/Stable'' by CRISIL Ratings Limited. Facility is fixed rate in nature.

• Credit Rating of J 5.0 billion non-convertible debentures at REIT level: Dual rating of ''CRISIL AAA/Stable'' by CRISIL

Ratings Limited and ''[ICRA] AAA (Stable)'' by ICRA Limited. Facility is fixed rate in nature.

• Credit Ratings of J 5.5 billion non-convertible debentures at REIT level: Dual rating of ''CRISIL AAA/Stable'' by CRISIL Ratings Limited and ''[ICRA] AAA (Stable)'' by ICRA Limited. Facility is fixed rate in nature.

• Credit Ratings of J 7.0 billion Commercial papers at REIT level: Dual rating of ''CRISIL A1 '' by CRISIL Ratings Limited and ''[ICRA] A '' by ICRA Limited. CPs to the tune of H 1.5 billion are outstanding as of March 31, 2024.

• Credit Rating of I 5.0 billion non-convertible debentures at REIT level: Dual rating of ''CRISIL AAA/Stable'' by CRISIL Ratings Limited and ''[ICRA] AAA (Stable)'' by ICRA Limited. Facility is fixed rate in nature

• Credit Rating of I 5.0 billion non-convertible debentures at REIT level: Dual rating of ''CRISIL AAA/Stable'' by CRISIL Ratings Limited and ''[ICRA] AAA (Stable)'' by ICRA Limited. Facility is fixed rate in nature

• Credit Rating of I 3.4 billion non-convertible debentures at REIT level: Dual rating of ''CRISIL AAA/Stable'' by CRISIL Ratings Limited and ''[ICRA] AAA (Stable)'' by ICRA Limited. Facility is fixed rate in nature

Key Ratios

Our loan to value ratio was low at 21.1% as on March 31, 2024. We have undrawn committed facilities of H 9.2 billion, which further augments liquidity. This provides us enough headroom for meeting the growth needs in the portfolio

Details of significant changes in key financial ratios (Consolidated)

Particulars	FY24	FY23
NOI Margin	81%	82%
Loan to value* (%)	21.1%	17.9%
Gross debt to NOI	3.7 times	3.2 times
Net debt to NOI	3.3 times	2.9 times
Return on net worth	3.76%	1.98%

* Adjusted for minority interest

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements. Distributions

NDCF of Mindspace REIT is based on the cash flows generated from its assets and investments. In terms of the REIT Regulations, not less than 90% of the NDCF of each of the Asset SPVs is required to be distributed to Mindspace REIT, as the case may be, in proportion of their shareholding in the Asset SPVs, subject to applicable provisions of the

Asset-wize gross asset value, along with key assumption
Asset		Discount Rate (%)		Discount Rate under construction / Future (%)		Cap Rate (%)		Market Rent			Completed (I Mn)		U/C & Future Dev. (I Mn)			Total Value (I Mn)		% of Total (%)
Mindspace Airoli East		11.75%		13.00%		8.00%			61.95	45,424				2,100		47,524		15.9%
Mindspace Airoli West		11.75%		13.00%		8.00%			58.85	44,930				3,091		48,021		16.1%
Mindspace Malad		11.75%				8.00%			96.60	11,329				0		11,329		3.8%
The Square, BKC		11.75%				7.75%			288.75	4,917				0		4,917		1.6%
Mumbai Region											106,600		5,191			111,791		37.4%
Gera Commerzone Kharadi		11.75%		13.00%		8.00%			85.05	23,995				7,320		31,315		10.5%
The Square, Nagar Road		11.75%		13.00%		8.00%			77.52	9,230				0		9,230		3.1%
Commerzone Yerwada		11.75%				8.00%			78.00	18,259				0		18,259		6.1%
Pune											51,484		7,320			58,804		19.7%
Mindspace Madhapur(1)		11.75%		13.00%		8.00%			74.55	95,024				12,717		107,741		36.1%
Mindspace Pocharam(2)		11.75%				8.00%			-	900				587		1,488		0.5%
Hyderabad											95,925		13,305			109,229		36.6%
Commerzone Porur		11.75%				8.00%			66.15	11,363				0		11,363		3.8%
Chennai											11,363		-			11,363		3.8%
Facilities Management Business		11.75%		13.00%		13x				6,437				1,107		7,545		2.5%
Portfolio Total											271,809		26,923			298,732		100.0%
Note:
(1) The Market Value of Mindspace Madhapur is with respect to 89.0% ownership of the respective Asset SPVs that own Mindspace Madhapur
(2) There has been a change in valuation methodology for Mindspace Pocharam
Balance & Planned Capital Expenditure as of March 31, 2024
Assets				Building		Region				Area (msf)				Pending CAPEX (J million)				Estimated Completion
Under Construction Projects														18,103
Commerzone Kharadi				Building 4		Pune				1.			0			1,777		Q3 FY25
Mindspace Madhapur				Building 1		Hyderabad				1.			3			5,944		Q4 FY26
Mindspace Madhapur				Building 8		Hyderabad				1.			6			7,870		Q4 FY27
Mindspace Madhapur				Experience Center Hyderabad						0.			1			950		Q1FY26
Mindspace Airoli (East)				High Street Retail Mumbai Region						0.		05				115		Q1FY25
Gigaplex				Building 8		Mumbai Region				0.			3			1,025		Q4 FY25
Others																422
Recently completed																517
Future Development Projects															4,813
Mindspace Airoli (East)																4,733
Others																80
Upgrade Capex															4,091
Fit-out & General Development																846
Total														28,370

Companies Act 2013. NDCF to be received by Mindspace REIT from the Asset SPVs may be in the form of dividends, interest income, principal loan repayment or proceeds of any capital reduction or buyback from the Asset SPVs, sale proceeds out of disposal of investments if any or assets directly held by Mindspace REIT or such other form as may be permitted by the REIT Regulations.

The Manager is required to declare and distribute at least 90% of the NDCF of Mindspace REIT as distributions (REIT Distributions) to the unitholders. Such distributions are to be declared and made for every quarter of a financial year. The first distribution was made upon completion of the first full quarter post the listing of Units, i.e., for the quarter ending December 31, 2020. Further, in accordance with the REIT Regulations, distributions need to be made within 15 days from the date of such declarations.

For FY24, we declared a distribution of H 11,362 million, or H 19.2 per unit comprising H 17.29 per unit as dividend and H 1.91 per unit as interest & other income payment. On an annualized basis, based on the issue price of H 275 per unit, the distribution yield stood at 7%.

Tax Implications of Distributions

As per provisions section 115UA of the Income Tax Act, 1961, income distributed by REIT is taxable in the hands of the unitholders in the same manner and proportion as the underlying income stream received by the REIT.

Taxability of income based on residential status
Residential status of unitholders	Nature of income	Tax rates
Resident	Interest income	At applicable rates*
unitholders	Rental income	At applicable rates*
	Return of Capital	To be adjusted from cost of acquisitions of units
	Qualified dividend income	Tax-exempt (Refer note below)
	Disqualified dividend income	At applicable rates* (Refer note below)
	Other income taxable in hands of REIT	Tax-exempt
Non-resident	Interest income	5%
unitholders	Rental income	At applicable rates**
	Qualified dividend income	Tax-exempt (Refer note below)
	Disqualified dividend income	At applicable rates** (Refer note below)
	Other income taxable in hands of REIT	Tax-exempt

* The income shall be subject to deduction of tax at source

** Non-resident unitholders may seek to avail beneficial provisions under the applicable Double Taxation Avoidance Agreement (''DTAA'') that India may have entered into with their respective country of residence

tax rate subject to applicable surcharge and cess.

Note: Taxability of income in the nature of dividend distributed by REIT to unitholders is dependent on the taxation regime adopted by the SPV(s). which distributes the dividend to REIT. If the SPV(s) has not opted for a concessional corporate tax rate under section 115BAA of the ITA (''Qualifying SPV'') dividend received from such Qualifying SPV (''Qualified Dividend'') and distributed by REIT is exempt in the hands of the Unitholders. Any dividend other than Qualified Dividend distributed by REIT (''Disqualified Dividend'') is taxable in the hands of the Unitholders.

NAV

KZEN Valtech Private Limited, has been appointed as the independent valuer by the Governing Board of the Manager, K Raheja Corp Investment Managers LLP (ie. prior to conversion of LLP) on March 14, 2023. In addition, Jones Lang La Selle (JLL), has been appointed by the Governing Board as an independent consultant to carry out industry and market research. As per the independent valuation exercize carried out, our portfolio is valued at H 298,732 million with 91.0% of value in completed assets, underpinning Mindspace Business Parks REIT''s asset quality as of March 31, 2024. NAV of the portfolio stood at H 380.5 p.u.

Statement of Net Assets at Fair Value
Sr Particulars No.	March 31, 2024
	(J in million)
A Fair Value of Real Estate Assets(1)	298,732
B Other Assets at Book Value	11,175
C Other Liabilities at Book Value	(84,236)
D Net Assets Value (A B-C)	225,671
E No. of Units (Mn)	593
NAV	380.5
Note:
1. Includes Real Estate & Facility Management Division
Contingent liabilities and Capital Commitments
As at As at In I million March 31,2024 March 31, 2023
Claims not acknowledged as debt in respect of
- Income-Tax matters 963 966
excluding interest
- Service-Tax matters 368 367
- Customs duty matters	xT CO co
- Stamp duty	LO CD LO CD
Stamp Duty and 221 -Registration Fees
Total 1,651 1,434

Occupancy Growth

Our Non-SEZ portfolio has achieved pre-covid occupancy levels with six out of our nine parks having committed occupancy levels exceeding 95%. As we navigate the evolving landscape of workplace dynamics, the resurgence of in-office operations, coupled with the continued growth of the GCC sector, serves as a robust driver for leasing expansion across our portfolio. Furthermore, recent reforms in SEZ regulations are expected to further mitigate any remaining vacancies.

Growing the Portfolio

Within our portfolio, we are strategically positioned to leverage embedded opportunities that promize substantial growth organically. With an area under development totaling 4.4 msf, including future developments amounting to 2.5 msf, we are poized for expansion. At Mindspace Airoli East Park, a composite structure spanning 0.8 msf announced, presenting a mixed-use development encompassing both office and hotel spaces. Additionally, significant redevelopment initiatives are underway at Mindspace Madhapur, encompassing c.3.0 msf. These organic porftfolio growth initiatives resulted in total leasable area of 33.2 msf up from 32.0 msf at the end of FY23.

Our portfolio demonstrates growth potential, underpinned by both organic development and opportunity to acquire the sponsor assets through the Right of First Offer arrangement. The sponsor boasts of a continuous prospective development pipeline of c.15 msf. Moreover, alongside our sponsor assets, we are actively exploring third-party inorganic opportunities to further augment our growth trajectory. These initiatives underscore our strategic foresight and determination to capitalize on emerging market trends while delivering sustained value to our stakeholders.

Human Resource

We are proud to announce that for the third consecutive year, we have been certified as a Great Place to Work. This recognition reaffirms our commitment to fostering a supportive and inclusive workplace culture. Gender diversity is a cornerstone of our hiring approach, and we''re proud to report that women now comprize 37% of our managerial workforce, ranking among the highest in our industry. Our initiatives, such as Shikhar and Sheroes, have empowered employees to ascend to leadership roles within the organization, showcasing our dedication to talent development and diversity. Moreover, our ''Reach Out'' initiative focusing on mental health and well-being has provided invaluable support to our employees. To dissolve hierarchical boundaries and foster open communication, we have initiated ''Coffee with CEO'' sessions, facilitating meaningful dialogue between our leadership and staff. Additionally, our ''Outbound Programs'' have strengthened team cohesion and personal connections through engaging outdoor activities. Lastly, CEO-led ''Townhalls'' have offered insights into our achievements and shared our vision for the organization''s future, ensuring transparency and alignment across all levels of the organization. These initiatives collectively underscore our unwavering commitment to nurturing a positive work environment and empowering our employees to thrive professionally and personally.

Internal Control Systems

Mindspace REIT has internal control systems commensurate with its size, scale and complexity to manage its operations, financial reporting, and compliance requirements. These systems have been designed to provide reasonable assurance with respect to recording and providing reliable financial and operational information in timely manner, prevention and detection of fraudulent practices, compliance with applicable laws, safeguarding assets from unauthorized use, executing transactions with proper authorization, and ensuring compliance with internal policies. The Manager has clearly articulated roles and responsibilities for all functional heads.

Functional heads are responsible to ensure compliance with the applicable laws, policies and procedures laid down by the Manager.

The systems, standard operating procedures, and controls are implemented and reviewed by the leadership team.

Based on the findings, process owners undertake corrective measures in their respective domains, thereby strengthening the controls. Deloitte Haskins & Sells LLP, who are our statutory auditors, audited the financial statements for each of the Asset SPVs as at March 31, 2024. They have expressed an unqualified opinion on the effectiveness of each Asset SPVs'' internal controls over financial reporting as of March 31, 2024.

Industry Structure and Developments

Industry Structure and Developments affecting our operations are captured on pages 70 to 77 of annual report

Outlook

India''s resilient leasing momentum is propelled by its tech ecosystem, characterized by significant offshoring and R&D activities spanning various sectors. The convergence of a skilled talent pool, cost efficiency, and quality real estate is fostering a sustained growth trajectory. Despite global headwinds, the country''s office markets have been minimally affected, underscoring the resilience of India''s commercial landscape.

GCCs now account for c.36% of all occupied Grade A stock across top seven cities, underscoring the pivotal role of tech offshoring across diverse sectors propelling demand within the country''s office market. This sustained trend is anticipated to maintain India''s office markets as among the most growth-oriented globally. Moreover, recent SEZ reforms, enabling floor-wize conversion to non-processing area (NPA), are poized to enhance occupancy levels, further bolstering market dynamics. With robust occupancies and a surge in enquiries, there is a positive outlook for rental growth in the near future.

Coupled with rental growth, leasing surge and rising domestic and GCC occupiers, our gross leasing recorded 3.6 msf helping our committed occupancy rising to 90.6% (excluding pocharam non-core asset). Our in-place rent have grown by 5.8% annually from H 65.2 psf pm to H 69 psf pm.

REITs have continued to receive support of Government and Regulator. Recent policy reforms under the existing SEZ Act to convert floor-wize SEZ processing areas to Non-Processing Areas helping to ramp up our occupancies further by leasing the vacant SEZ spaces in our parks.

REITs are a stable asset class drawing interest from a broader spectrum of investors in both equity and debt markets. Our unitholder base has surpassed 60,000, marking a remarkable 7.7x growth since our listing in August 2020, with expectations for continued expansion in the years ahead. To bolster this momentum, we conducted retail roadshows aimed at educating retail investors about REITs as an attractive investment option, further enhancing our outreach and engagement efforts.

With prudent financial and debt management, our low LTV would help us to explore the inorganic growth opportunities.

With our seasoned management team''s expertize and pragmatic approach, we navigate the growth-oriented office market, creating long-term value for our unitholders.

---

Mar 31, 2023

The discussion and analysis of our financial condition and results of operations that follow are based on our Audited Consolidated Financial Statements of Mindspace REIT and the Asset SPVs (together known as “Mindspace Group”) for the year ended March 31, 2023 prepared in accordance with Indian Accounting Standards and applicable REIT regulations.

for their expansion plans, and the expansion of marquee tenants such as Accenture, BA Continuum, and L&T within our portfolio is a testament to this. Further, our in-house facility management division and regular tenant engagement activities enable us to maintain high tenant retention.

Strong leasing amidst global uncertainty

Mindspace REIT has recorded second consecutive year of gross leasing of over 4 million square feet amidst volatile global economy and capital markets. On the back of strong leasing activity, we have recorded sharp improvement in committed occupancy. We started the year with a committed occupancy of c.84.3%, which has risen by c. 470 bps during the financial year and touched c.89.0%. Our all 3 assets in Pune and the assets at BKC and Malad are almost fully leased with near 100% committed occupancy. Our parks at Madhapur and Porur are recording c.95% committed occupancy. The strong demand for our offerings at Pune and the dearth of space availability, has encouraged us to bring forward the timelines of future development in Pune. Also, we are strategically bringing in incremental supply in markets which are optimally occupied, by undertaking another redevelopment opportunity at Madhapur which we announced during the year. We continue to undertake such strategic calls to bring in additional supply within our existing portfolio in our quest to create long-term value to our stakeholders.

Executive Summary

Mindspace REIT is one of India’s leading providers of dynamic urban cluster of Grade A integrated business campuses, independent standalone office buildings and data centers across premium office submarkets of the Mumbai region, Hyderabad, Pune, and Chennai. Our portfolio comprises five integrated business parks and five quality independent offices, with a total leasable area of c. 32.0 msf (25.8 msf completed; 2.5 msf under construction; 3.7 msf future development). The portfolio has inherent growth drivers in the form of potential re- leasing spread, contractual escalations, vacant area leasing, on-campus developments, and re-development opportunities across select assets. We also stand to benefit from the ROFO agreement with the KRC group, which gives us an opportunity to acquire certain projects being developed or proposed to be developed, subject to the terms of the ROFO agreement.

Our strategic focus is to target right set of occupiers and become their partner of choice and undertake proactive asset management and enhancement initiatives. We continue to forge enduring relationship with our tenants, providing them with customised real estate solutions. Our parks are distinguished by their scale and thus making us the preferred partner of both domestic and foreign multinational corporations.

Tenant Profile

We currently have an unparalleled base of over 200 tenants, and are home to high-quality tenants such as Accenture, Qualcomm, Cognizant, L&T, Wipro, IDFC, Smartworks, Amazon, Verizon, Barclays, UBS, BNY Mellon, Bank of America, and Schlumberger. While tenants from the technology sector have traditionally comprised to be our largest tenant base, we have diversified our tenant base to Non-IT sectors as well. Over 53.7% of our gross contracted rentals come from sectors such as BFSI, Telecom and Media, Engineering & Manufacturing and Healthcare and Pharma. Some of the marquee tenants from these sectors include HDFC Bank, Axis Bank, ADP, Dow Chemicals, Springer Nature and Hitachi etc. Technology, financial services and telecom and media constitute our three largest sectors with contribution to Gross Contracted Rentals of 46.3%, 18.7% and 8.2%, respectively as on March 31, 2023. Approximately 75.4% and 31.2% of Gross Contracted Rentals come from leading multinational corporations and Fortune 500 companies, respectively. No single tenant contributes more than 5.3% of gross contracted rentals as on March 31, 2023. We have added 33 new tenants in the portfolio during the year.

Our commitment to building trusting tenant partnerships, and our concerted efforts to retain existing tenants and attract new occupiers have been reasons for our consistent growth. We are proactive when it comes to understanding tenant needs as this helps us curate customized services and deliver a wholesome experience. Our tenants associate huge value with our offerings, choosing us as the partner

Capturing demand for Grade A offerings

Grade A occupiers are increasingly looking at institutionally managed campus style offerings. Attractive GCC outlook and IT hirings in last 2 years, return to office are expected to support the near to medium term demand outlook, As a result, we are strategically bringing in supply in our micromarkets. During the course of the year, we expect to have c. 4.3 msf of total leasable area at various stages of development pipeline subject to regulatory approvals. The key projects in the pipeline include potential redevelopment buildings at Mindspace Madhapur (c. 2.9 msf), Building no. 4 at Commerzone Kharadi (1.0 msf), data center building at Mindspace Airoli, West (0.3 msf) amongst other projects.

Rejuvenate our offerings

We place a strong emphasis on upgrading our assets to offer best-in-class experience to our tenants. Between FY19-FY23, we have spent a cumulative of ? 3,023 Mn on upgrading assets. Our asset-enrichment initiatives include elevated boardwalks, re-energized lobbies, added open spaces for breakouts within building, adding amenities with the buildings & parks, refurbishment of lift lobbies & common restrooms, remodeling landscapes, improving connectivity to MRTS, well-spread F&B spaces, revamping facades, using energy efficient lighting, installing signages, and wall art. We are also adding premium experiential, recreational and dining zones in the form of high street retail at some of our assets.

We also actively undertook technological improvements in the areas of building management and sustainability, and this included the design and re-engineering of our sewage treatment plants and weather modelling based on predictive analytics for electricity consumption in our buildings. We were able to carry out this complex task seamlessly during the downtime with minimum discomfort to our tenants.

These continued investments ensure that our assets are differentiated from that of competition and offer the value our occupiers look for. The pandemic has invigorated the trend of shift to quality office spaces, and we have benefitted as a result and have leased over 12 msf since April 2020. The upgrades have also helped us record higher MTM during re-leasing as our assets are benchmarked with the best in the market.

Evolving Business Dynamics

The Indian office market has shown considerable resilience. While many developed markets are yet to cross pre-COVID levels of absorption, the Indian office market in CY22 made a sharp rebound from the pandemic-induced lull to clock the second-highest transaction volumes ever. There is a plethora of factors that have contributed to this resilience - the vast availability of STEM talent in India, the strong IT industry, offshoring capabilities, cost arbitrage, growth of BFSI industry and overall economic growth of the country.

Change in Occupiers’ Definition of Grade A

Over the past five years, India has witnessed an on-going transition, from unorganized segments to organized segments, and this has only accentuated post the pandemic. We see this trend playing out in real estate as well. Strata-sold assets are now no-longer considered Grade A by a significantly large segment of top-notch occupiers. Occupiers are keen to shift out of strata-sold assets, given the challenges like negotiating with multiple landlords to implement health and safety protocols. They are willing to pay a premium for a single portfolio owner Grade A building. The focus on quality is more prominent in the occupier segments that we target, and, as a result, we have recorded a second consecutive year of 4 msf of leasing. This has helped committed occupancy in our portfolio rise by c. 470 bps during the year to 89.0%.

Challenging Economic Conditions Developing Globally

The rise in interest rates by most central banks across the globe to tackle inflation is leading to uncertain macro-economic conditions. Several companies have slowed their expansion and hiring plans anticipating weaker economic growth ahead. This may have a bearing on office demand in India in the near term. Several large RFPs which were active in the market for the past few years have gone on hold and occupiers are now focusing on taking incremental space near existing office for expansion.

We expect the large ticketed demand to remain soft in H1 FY24, although the impact on office demand will be short lived as advantage of India remains unaffected. Historically, cost pressures have led to offshoring to India.

Further, Indian tech companies and GCCs/GICs have hired a record number of people over the past few years and their space takeup has not been commensurate with their hiring. With the employee now returning to the office, there is increased pressure on companies to take up new spaces which is likely to provide a fillip to expansion demand in the coming quarters.

Upcoming Supply in our Micro-markets

The rise in interest rates and high inflation coupled with challenging macro-economic environment is leading to construction of speculative supply. Strong residential demand is also leading to re-alignment of some commercial supply to residential.

We are using this gap to bring forward strategic supply in the micro-markets where our assets are operating at optimum occupancy. During the year, we announced our decision to undertake another strategic redevelopment opportunity at Mindspace Madhapur, Hyderabad which currently has committed occupancy of over 95%.

We will be demolishing two erstwhile buildings 7 & 8 of 0.36 msf combined and would be constructing a single building of 1.61 msf. This is in addition to the earlier redevelopment of buildings 1A-1B which is currently underway.

During FY22, we had similarly decided to bring in strategic supply by bringing forward the construction timelines of our future development at Gera Commerzone Kharadi from July 2022 to January 2022. We had anticipated a shortage of space at our parks in Pune. With our parks in Pune recording 100% committed occupancy (at the end of FY23), this upcoming supply would give us leverage to hold on to our existing tenants who are looking for expansion as well as attract new tenants.

We continue to explore value accretive opportunities to bring forward strategic supply in our markets where our assets are operating at almost full capacity thereby creating value to our unitholders.

Highlighting the Importance of Office Spaces

While working from home offers flexibility and comfort, it cannot replace the collaborative atmosphere and social interactions a physical office space provides. Employees and employers have come to realize that permanent remote work could lead to a blurring of work-life boundaries and missed opportunities for mentorship and office camaraderie. Many companies have started asking employees to return to office. If we refer to the FY23 results of Indian IT companies, several companies have indicated that they have started calling employees back to office in phases. While the number of days a week that an employee is required to attend office is still being evaluated, it has become evident that office spaces are going to be the center of future workplace models.

Our conversations with tenants and on-ground park attendance have indicated a significant ramp up in physical occupancy at our parks as we head into the new financial year. We expect to see further improvement if there is no resurgence of infections. With IT companies and GCCs having hired a record number of people, there is a need to expand office spaces.

Growing Emphasis on Asset Quality

Given our ability to understand the business better and stay ahead of competition, there are two major trends that we see unfolding:

1. Active asset management with regular upgrades of building

The role of a developer constructing an office asset has evolved today. Developers can no longer construct the asset and manage it passively post leasing and push the responsibility of maintenance on the tenant. Occupiers are expecting developers to partner with them by actively manage the asset - by carrying out regular maintenance, ensure necessary repairs, upgrade the support infrastructure, add recreational spaces, ramp up procurement of renewable power supply, add newer amenities, and implement robust health, wellness, and safety protocols. Occupiers want to provide their employees to enjoy an experiential office ecosystem which they would look forward to visit everyday and such assets usually command a premium.

2. Emphasis on occupying sustainable assets that score high on ESG metrics

Organizations across the globe are working towards achieving their net zero emission targets, and there is an increased preference in occupying assets that score high on ESG benchmarks. For companies in the services industry, real estate is a significant contributor to their environmental footprint and there is increased pressure to reduce their environmental footprint.

With our in-house facility management division, regular asset upgrades, and unwavering commitment to creating sustainable asset ecosystems that are benchmarked with the best in the world, we remain on top in both areas. Apart from constantly striving to increase our share of renewable energy, we also actively undertook technological improvements in the areas of building management and sustainability; this included the design and re-engineering of our sewage treatment plants and weather modeling based on predictive analytics for electricity consumption in our buildings thereby reducing the environment footprint.

We forsee actively managed assets and assets that score high on ESG benchmarks garner increasing share of leasing in respective markets leading to growth in rents.

Risks and Concerns

Risks and concerns affecting our operations are captured in section ‘Risk Factors’ on page number 116 to 119.

Basis of Preparation of Consolidated Financial Statements

Please refer Basis of preparation stated in Consolidated financial Statements on page number 295 to 296.

Summary of significant accounting policies

Please refer Significant Accounting Policies stated in Consolidated financial Statements on page number 296 to 311.

Principal components of consolidated statement of profit and loss

Our revenue from operations comprises the following sources: (i) facility rentals; (ii) income from maintenance services; (iii) revenue from works contract services; (iv) revenue from power supply; and (v) other operating income.

Facility rentals

Revenue from facility rentals comprises the base rental from our properties income from car parking and others and certain Ind-AS adjustments to reflect the impact of straight lining of leases and discounting of security deposits.

¦ Base rentals: Base rentals comprise rental income earned from the leasing of our assets

¦ Income from car parking and others: Primarily, includes income from car park, kiosks, signage, ATMs, promotional events, among others

Income from maintenance services

Income from maintenance services consists of the revenue that we receive or is receivable from tenants for the Common Area Maintenance (CAM) services provided as per the terms of agreement with the tenants, and also includes revenue from common area maintenance services provided to third parties, if any, located within the assets.

Revenue from works contract services

Revenue from works contract services includes revenue earned from providing the services of construction of building for the customer based on their specification and requirements.

Revenue from power supply

Revenue from power supply includes income from supply of power to tenants within the notified SEZ as per the tariff regulations stipulated by Maharashtra Electricity Regulatory Commission (MERC).

Other operating income

Other operating income primarily includes (i) interest income from finance lease, which comprises interest income from fit-out rentals where such leases are classified as finance leases. Leases are classified as finance leases when substantially all the risks and rewards of ownership is transferred to the lessee; (ii) income from sale of surplus construction material and scrap; and (iii) service connection charges for power supply and other charges and (iv) anycompensation received from customer.

Interest income

Our interest income comprises the following sources: interest income on (i) fixed deposits with banks; (ii) electricity deposits; (iii) income-tax refunds, and (iv) others.

Other income

Our other income primarily comprises: (i) gain on redemption of investments; (ii) Liabilities no longer required written back, and (iii) miscellaneous income and (iv) Foreign Exchange net gain

Expenses

Our expenses primarily comprise: (i) cost of work contract services (ii) cost of power purchased (iii) employee benefit expenses (iv) cost of property management services (v) repairs and maintenance (vi) Management Fees (vii) other expenses (viii) finance cost (ix) depreciation and amortization expenses.

Cost of work contract services

Cost of work contract services is the expenses incurred towards construction of a building, based on agreed specifications and requirements, pursuant to the works contract executed by KRC Infra with respect to the portion of land owned by the counterparty.

Cost of power purchased

Cost of power purchased is cost incurred for purchase of power, transmission charges and related expenses with respect to supply of power to tenants within the notified SEZ.

Employee benefits expenses

Employee benefits expenses primarily include salaries and wages, contribution to provident and other funds, gratuity expense, compensated absences and staff welfare expenses.

Cost of property management services

Cost of property management services primarily include expenses incurred for facility maintenance services.

Repairs and maintenance

Repairs and maintenance expenses primarily include expenses incurred on repairs and maintenance of buildings and plant and machinery and electrical installation.

Management Fees

Management Fees is the fees paid to the Manager in relation to the services provided under the property management services (net of the employee expenses directly incurred by the Asset SPVs) and support services agreement.

Other expenses

Other expenses primarily comprise property tax, electricity, water and diesel charges, brokerage and commission, business support fees paid to the KRC group, rates and taxes, corporate social responsibility expenses, assets written off /demolished and business promotion and advertisement expenses.

Revenue from operations increased by 30.6% from ?17,577 million in FY22 to ? 22,962 million in FY23. Excluding revenue from works contract services which is accounted only in FY23 and not recognized in FY22, the Revenue from Operations grew by 17.7% y-o-y. The increase in revenue from operations in FY23 primarily on account of:

¦ an increase in facility rentals by 13.1% from H 14,185 million to 16,047 million primarily due to escalations, increase in rentals from mark to market opportunity and lease up of new and vacant area

¦ an increase in income from maintenance services by 32.0% from H 2,635 million to H 3,478 million on account of increase in occupancy in our parks as well as increase in the expenses towards common area maintenance due to increase in physical occupancy as companies implemented back to office mandates

Earnings before finance costs, depreciation and amortization, regulatory income/expense and tax

We have elected to present earnings before finance costs, depreciation and amortization regulatory income/expense and tax as a separate line item on the face of the statement of profit and loss.

EBITDA is generally defined as net profit before interest expense, taxes, depreciation and amortization. However, Ind AS 114 (Regulatory Deferral Accounts) requires the movement in all regulatory deferral account balances to be distinguished from other income and expenses. Hence, for the purpose of Consolidated Financial Statements, included in this Annual Report, net movement in regulatory deferral account balances has been disclosed separately in the Statement of Profit and loss after ‘Profit before rate regulated activities and tax’ and thus does not form part of EBITDA.

Depreciation and amortization expenses

Depreciation and amortization expenses comprise the depreciation of property, plant and equipment; depreciation of investment property; amortization of intangible assets and amortization of right of use of assets.

Finance costs

Finance costs primarily comprise: (1) interest expenses on borrowings from banks and financial institutions; debentures; bonds; (iii) lease liability; and (iv) others; (2) unwinding of interest expenses on security deposits; and (3) other finance charges. We capitalize borrowing costs in relation to under construction properties. Once construction is completed, the interest cost is charged to statement of profit and loss, causing an increase in finance costs.

Regulatory income/expense

As a deemed power distribution licensee in the SEZ area, some of our Asset SPVs charge tenants tariff on power consumption that is pre-approved by the state regulatory authority, Maharashtra Electricity Regulatory Commission (MERC). Accordingly, as per the Multi-Year Tariff (MYT) regulations, we file a tariff petition for the control period based on projected expenses and revenue during the period. MERC reviews the tariff petition and approves expenses and revenue in compliance with the tariff regulations. Subsequently, we submit our audited accounts to MERC to undertake a truing up process, wherein MERC compares the actual expenses and revenue with the approved expenses and revenue for the past year, and allows total revenue gap / (surplus) to be recovered in the succeeding years tariff. As a result, there is an increase/(decrease) in succeeding years tariff based on past years revenue gap/(surplus), and this change is referred to as impact on account of true-up. Such revenue gap/(surplus) for the past years is recorded as regulatory income/(expense) in the financials.

Tax expense

Tax expense comprises: (1) current tax and (2) deferred tax charge (net)

The Indian Income Tax Act provides companies an option to discharge their income tax liability at a concessional rate of 25.17% (including cess and surcharge) subject to fulfilment of certain conditions which includes opting out of other applicable tax holiday claims/ incentives/ tax exemption and utilizing MAT credit (“New Tax Regime”). With respect to the Consolidated Financial Statements as of and for the year ending March 31, 2023, and for the year ending March 31, 2022, we have not opted for the New Tax Regime and continue to discharge our income tax liability as per the existing tax regime.

¦ One time compensation of H 186 million received from tenant in FY23 on account of cancellation of lease during lock-in period at The Square BKC

During FY23 we achieved

¦ Gross leasing of c. 4.1 msf

¦ New and vacant leasing of c. 2.5 msf

_¦ Contracted lease escalations on c. 4.4 msf area

¦ Re-leasing spread of 26.3% over 2.3 msf area (incl. releasing and vacant area leasing)

Direct operating expenses (excluding cost of works contract services) increased in line with the increase in revenue from operations and maintenance services. The NOI Margin excluding works contract services is 82.2%.

Comparison of financial numbers:
	FY 23			FY 22
	Amount (H Million)	Share (%)		Amount (H Million)	Share (%)
Facility rentals	16,047	69	9%	14,185	80	7%
Maintenance services	3,478	15	2%	2,635	15	0%
Revenue from power supply (1)	731	3	2%	516	2	9%
Revenue from works contract services	2,277	9	9%	0	0	0%
Interest income from finance lease	160	0	7%	189	1	1%
Sale of surplus construction material and scrap	83	0	4%	52	0	3%
One time Compensation	186	0	8%	0	0	0%
Revenue from Operations (2)	22,962	100.	0%	17,577	100.	0%
Cost of work contract services	2,181	9	5%	0	0	0%
Direct Operating Expenses	3,680	16	0%	2,637	15	0%
Net Operating Income (2)	17,101	74.	5%	14,940	85.	0%
1. Include Regulatory Income/ (Expense) from the power business 2. Represents 100% of the SPVs including minority interest in Madhapur SPVs

Profit and Loss statement analysis
(I Million)	For the year ended March 31,2023 (Audited)	For the year ended March 31,2022 (Audited)	% Variance
Revenue from Operations	22,821	17,501	30%
Interest Income	157	107	47%
Other Income	63	88	-28%
Total Income	23,041	17,696	30%
Expenses
Cost of work contract services	2,181	-	-
Cost of materials sold	15	6	133%
Cost of power purchased	817	444	84%
Employee benefits expense	285	226	26%
Cost of property management services	594	398	49%
Trustee fees	5	2	112%
Valuation fees	7	9	-22%
Insurance expense	87	86	1%
Audit fees	25	19	32%
Management fees	565	500	13%
Repairs and maintenance	682	539	27%
Legal & professional fees	180	113	59%
Other expenses	2,002	1,510	33%
Total Expenses	7,445	3,853	93%
Earnings before finance costs, depreciation and amortisation, regulatory income / expense, exceptional items and tax	15,596	13,843	13%
Finance costs	3,431	2,644	30%
Depreciation and amortisation expense	3,554	3,289	8%
Profit before rate regulated activities, exceptional items and tax	8,611	7,910	9%
Add : Regulatory income/ (expense) (net)	205	76	170%
Add : Regulatory income/(expense) (net) in respect of earlier periods	(64)	-	-
Profit before exceptional items and tax	8,752	7,986	10%
Exceptional Items	(1,368)	(843)	62%
Profit before tax	7,384	7,143	3%
Current tax	1,895	1,767	7%
Deferred tax charge / (income)	2,404	903	166%
Profit for the period/year	3,085	4,473	-31%
Profit for the period/year attributable to unit holders of Mindspace REIT	2,836	4,238	-33%
Profit for the period/year attributable to non-controlling interests	249	235	6%
Our revenue from operations and Profit for FY23 stood at H 22,821 million and H 3,085 million, respectively.

Employee benefits expenses

Employee benefits expenses primarily include salaries and wages, contribution to provident and other funds, gratuity expense, compensated absences and staff welfare expenses has increased by H 59 mn

Cost of property management services

Cost of property management services primarily increased by H 196 mn primarily on account of increase in cost of engineering services, security expenses, AMC expenses and house keeping services

Repairs and maintenance

Repairs and maintenance expenses on buildings and plant and machinery and electrical installation increased by H 143 mn in FY23 compared to FY22

Management Fees

Management Fees which is paid to Manager as a percentage of lease rent, license fees, car park charges, any other

compensation and fitout rentals, increased by H 65 mn in line with the increase in aforementioned revenue streams.

Other expenses

Other expenses has increased from FY22 to FY23, primarily due to

¦ H 252 mn increase in electricity, water and diesel charges

¦ H114 mn increase in assets written off/ decapitalization in various parks due to replacement with newer installations as part of upgradation

¦ Increase in miscellaneous expense by H 76 mn Financial Resources

As of March 31, 2023 our cash and cash equivalents stood at H 4,062 million. Cash and cash equivalents primarily consist of balances with banks in current accounts, deposit accounts with original maturity below three months and cash on hand. Our undrawn facilities stood at H 13,704 million. We maintain a strong liquidity position consisting of cash and treasury balances.

Summary of cash flow statement
Particulars	FY 23 Consolidated	FY 22 Consolidated
Net cash generated/(used in) from operating activities	13,930	11,618
Net cash (used in) / generated from investing activities	(7,506)	(4,558)
Net cash generated used in financing activities	(4,563)	(7,543)
Net increase/(decrease) in cash and cash equivalents	1,861	(483)
Cash and cash equivalents at the beginning of the period/year	982	1,465
Cash and cash equivalents acquired due to asset acquisition	-	-
Cash and cash equivalents at the end of the period / year (Net of book overdraft)	2,843	982
Cash and cash equivalents comprises of
Cash on hand	3	2
Balance with banks
- on current accounts	3,176	3,046
- in escrow accounts ***	3	0
Deposit accounts with less than or equal to three months maturity	880	430
Cash and cash equivalents at the end of the period / year	4,062	3,478
Less : Bank overdraft	(1,219)	(2,496)
Cash and cash equivalents at the end of the period / year (Net of book overdraft)	2,843	982

Cost of work contract services

Cost of work contract services of H 2,181 mn is the expenses incurred towards construction of a building for Gera Developments Private Limited in Gera Commerzone Kharadi, Pune

Cost of power purchased

Cost of power purchased has increased by H 373 mn on account of increase in consumption of power as tenants staff returned to offices in FY23 and increase in power purchase costs.

Cash flow from operating activities

Net cash generated from operating activities for FY23 was H 13,930 million. Our profit before tax was H 7,384 million, which was adjusted for non-cash and items relating to financing and investing activities, by a net amount of H 8,489 million, primarily for finance costs amounting to H 3,431 million, depreciation and amortization expenses amounting to H 3,554 million. Our changes in working capital primarily

comprised an increase in trade payables of H 4 million, an increase in trade receivables of H 708 million, a decrease in other inventories of H 46 million, increase in other noncurrent and current assets (including financial assets) of H 1093 million, an increase of other non-current and current liabilities (including financial liabilities) and provisions amounting to H 361 million. In addition, we paid income tax (net of refund) of H 1,736 million.

Cash flow from investing activities

Net cash used in investing activities was H 7,506 million for FY23, primarily comprising interest received of H46 million which was primarily offset by expenditure incurred on investment property and investment property under construction, including capital advances, net of capital creditors, property, plant and equipment and intangible assets of H 7,660 million, primarily with respect to Mindspace Airoli West, Gera Commerzone Kharadi, Mindspace Madhapur (Sundew) and Commerzone Porur, and net investment in fixed deposits of H 50 million.

Cash flow from financing activities

Net cash utilized in financing activities was H 4,563 million for FY23, primarily comprising proceeds from issue of non-convertible debentures of H 15,400 million which was offset by net repayment of external borrowings of H 3,988 million, finance costs paid of H 3,871 million, distribution to unitholders and dividend to Non-Controlling Interest holder (including tax) of H 12,009 million and expenses incurred towards the issue of non-convertible debentures of H 81 million.

Capital expenditure and capital investments

Capital expenditure comprises additions during the financial year to property, plant and equipment, capital work-in progress, investment property, intangible assets and investment property under construction. During FY23, we incurred capital expenditure of H 7,660 million, primarily for the construction activity at Mindspace Airoli West, Gera Commerzone Kharadi, Mindspace Madhapur (Sundew) and Commerzone Porur and re-energizing out assets via upgrades and infrastructure upgrades. Out of the total capital expenditure 1,130 million of the capital expenditure was towards re-energizing our assets. Our capital commitments (net of advances) as at March 31, 2023 was H 5,173 million

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Liquidity and capital resources Overview

Our low leverage and robust credit profile offer adequate headroom for future growth.

For the year ended March 31, 2023, we,

¦ Raised H 10.5 billion in fixed cost debt from financial institutions at Mindspace REIT and via issuance of NCDs bearing coupon ranging between 7.95% to 8.02% % on p.a.p.q. basis

¦ Raised H 4.9 billion via issuance of variable coupon NCD at MBPPL level

- We strategically increased our exposure to fixed cost debt to c. 47.5% of our total outstanding debt, cushioning us against the raising of rates by central banks globally.

¦ Debt raised during the year was predominantly used for refinancing existing debt and to fund capital expenditure

Our finance costs for FY23 stood at H 3,431 million. Our weighted average cost of borrowings stands at 7.6% at the end of March 2023, higher by c.100 bps from 6.6% at the end of March 2022 and c.50 bps higher than 7.1% at the end of March 2021. Our weighted average term to maturity for borrowings stands at c. 5.4 years at the end of March 2023. The increase in cost during the financial year FY23 is on account of increase in repo rates by 250 bps by Reserve Bank of India.

Debt maturity schedule

Weighted average maturity of debt profile stands at c. 5.4 years with 10.3% and 27.5% of debt due for repayment in FY24 and FY25, respectively.

which further augments liquidity. This provides us enough headroom for meeting the growth needs in the portfolio

Details of significant changes in key financial ratios (Consolidated)

Particulars	FY23	FY22
NOI Margin	82%	85%
Loan to value* (%)	17.9%	15.7%
Gross debt to NOI	3.2 times	3 times
Net debt to NOI	2.93 times	2.62 times
Return on net worth	1.98%	2.72%
* Adjusted for minority interest

Off- Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements.

Distributions

NDCF of Mindspace REIT is based on the cash flows generated from its assets and investments. In terms of the REIT Regulations, not less than 90% of the NDCF of each of the Asset SPVs is required to be distributed to Mindspace REIT, as the case may be, in proportion of their shareholding in the Asset SPVs, subject to applicable provisions of the Companies Act or the LLP Act. NDCF to be received by Mindspace REIT from the Asset SPVs may be in the form of dividends, interest income, principal loan repayment

or proceeds of any capital reduction or buyback from the Asset SPVs, sale proceeds out of disposal of investments if any or assets directly held by Mindspace REIT or such other form as may be permitted by the REIT Regulations. Further, Mindspace REIT is required to distribute at least 90% of its NDCF to the unitholders.

The Manager is required to declare and distribute at least 90% of the NDCF of Mindspace REIT as distributions (REIT Distributions) to the unitholders. Such distributions are to be declared and made for every quarter of a financial year. The first distribution was made upon completion of the first full quarter post the listing of Units, i.e. for the quarter ending December 31, 2020. Further, in accordance with the REIT Regulations, distributions need to be made within 15 days from the date of such declarations.

For FY23, we declared a distribution of H 11,327 million, or H 19.1 per unit comprising H 17.5 per unit as dividend and H 1.6 per unit as interest & other income payment. On an annualized basis, based on the issue price of H 275 per unit, the distribution yield stood at 6.9%.

Tax implications of distributions

As per provisions section 115UA of the ITA, income distributed by REIT is taxable in the hands of the unitholders in the same manner and proportion as the underlying income stream received by the REIT.

NAV

KZEN Valtech Private Limited, has been appointed as the independent valuer by the Governing Board of the Manager, K Raheja Corp Investment Managers LLP on March 14, 2023. In addition, Jones Lang La Selle (JLL), has been appointed by the Governing Board as an independent consultant to carry out industry and market research. As per the independent valuation exercise carried out, our portfolio is valued at INR 280,265 million with 92.7% of value in completed assets, underpinning Mindspace Business Parks REIT''s asset quality as of March 31, 2023. NAV of the portfolio stood at 371.9 p.u.

Statement of Net Assets at Fair Value
Si- Particulars No.		March 31, 2023 (I million)
A Fair Value of Real Estate Assets (1)		280,265
B Other Assets at Book Value		7,900
C Other Liabilities at Book Value		67,602
D Net Assets Value (A B-C)		220,563
E No.of Units (Mn)		593
NAV		H371.9 p.u.
Note:
1. Includes Real Estate & Facility Management Division
Particulars	As at March 31, 2023	As at March 31, 2022
Contingent liabilities
Claims not acknowledged as debt in respect of
- Income-Tax matters excluding interest	936	936
- Service-Tax matters	367	367
- Customs duty matters	34	34
- Stamp duty	65	65
Total	1,402	1,402

Improving occupancy

We started the year with a committed occupancy of c.84.3%, which has risen by c. 470 bps during the financial year and touched c.89.0%. Our all 3 assets in Pune and the assets at BKC and Malad are almost fully leased with near 100% committed occupancy. Our parks at Madhapur and Porur are recording c.95% committed occupancy. The back-to-office momentum is strengthening for large companies, and we are optimistic that the smaller ones will follow soon, thereby increasing takers for vacant spaces.

Growing the portfolio

We are constantly evaluating opportunities to grow the portfolio both organically and inorganically. Looking at the space take up in our under-construction assets on account of robust demand from large occupiers, we

have decided to advance the construction timelines of our future developments. FY23 marked another strong year of development achievement. During the year, we completed and placed into service 1.9 msf of developments that were 83% leased. At present, we have an under-construction footprint of 2.5 msf at various stages of development. In addition, we also anticipate shortly commencing work in redeveloping buildings 7&8 at Mindspace Madhapur and the B8 data center at Mindspace Airoli (West). As a result of these initiatives, the total leasable area of the REIT portfolio now stands at 32.0 msf, up from 30.2 msf at the end of FY21.

On acquisitions, as we had intimated in our stock exchange filings dated 14 March 23, given the volatility in the market conditions over the past few months, the Sponsor has decided to defer the opportunity offered to the REIT to acquire ROFO asset - Commerzone Raidurg for now and have agreed to re-offer the ROFO opportunity as and when the market stabilizes. The shareholders of the SPV that holds the other acquisition opportunity - ‘The Square Avenue 98’ situated in BKC Annexe have also decided to defer the opportunity offered to the REIT to acquire the asset for now and have agreed to re-offer the acquisition opportunity to the REIT first as and when the market stabilizes.

We are constantly evaluating a number of opportunities to acquire assets from the market. However, the opportunity must be NAV and yield accretive to our unitholders.

Human resource

We are proud to announce that Mindspace has been recognized as ‘Great Place To Work’ for the second consecutive year. We have inculcated people-centricity in our work culture with the help of several initiatives which is reflected in the survey.

Promoting gender diversity has been at the core of our hiring policies and we have made significant strides in this regard. Women comprise of 32% of our managerial workforce, which is amongst the highest in industry. Key portfolios of Finance, Accounts, Structural Engineering, Marketing, Human Resources, Corporate Communications have women at leadership roles. We have initiated a new encouraging hiring of personnel who had taken a break from career to return to corporate world through our ‘Relaunch’ program and we expect women to be major beneficiaries of the initiative. This will help further improve our gender diversity.

Across all levels, women have made substantial contributions to the continued success of Mindspace. We believe that women can make an impact in leadership roles, and to further this, we introduced a 4-month program called ‘Sheroes’ that will serve as a platform for women to take the next step up in their careers with us. The program grooms select women employees to support them in making an impactful transition into leadership roles. Also, launched a year ago, ‘Shikhar’ program which aims to build a vibrant pool of talented performers who can take up leadership positions across different group companies. The program focuses on building areas of expertise that are relevant across the group companies despite the diverse business interests.

We always believe in giving equal opportunities and unbiased work employment to all our employees. We have conducted special workshops to sensitize our workforce towards LGBT community as we intend to provide more employment opportunities to people from these groups. During the year we have welcomed our first LGBTQ employee, a transgender woman. She proudly represents our diverse workforce and manages the Front Office Desk at our Corporate Office.

Internal control systems

Mindspace REIT has internal control systems commensurate with its size, scale and complexity to manage its operations, financial reporting, and compliance requirements. These systems have been designed to provide reasonable assurance with respect to recording and providing reliable financial and operational information in timely manner, prevention and detection of fraudulent practices, compliance with applicable laws, safeguarding assets from unauthorized use, executing transactions with proper authorization, and ensuring compliance with internal policies. The Manager has clearly articulated roles and responsibilities for all functional heads. Functional heads are responsible to ensure compliance with the applicable laws, policies and procedures laid down by the Manager.

The systems, standard operating procedures, and controls are implemented and reviewed by the leadership team.

Based on the findings, process owners undertake corrective measures in their respective domains, thereby strengthening the controls. DELOITTE HASKINS & SELLS LLP, who are our statutory auditors, audited the financial statements for each of the Asset SPVs as at March 31, 2023. They have expressed an unqualified opinion on the effectiveness of each Asset SPVs’ internal controls over financial reporting as of March 31, 2023 environment, and we remain confident of the long-term fundamentals of Grade A commercial real estate in India.

Industry Structure and Developments

Industry Structure and Developments affecting our operations are captured on pages 64 to 69 of annual report

Outlook

Indian office market has shown remarkable resilience. While many developed markets are yet to cross pre-COVID level of absorption, Indian office market in CY22 has rebounded sharply from the COVID induced lull and has clocked second highest transaction volumes ever. A plethora of factors have contributed to this resilience - the vast availability of STEM talent in India, strong IT industry, offshoring capabilities, cost arbitrage, growth of BFSI industry and overall economic growth of the country.

The momentum continued in Q1 CY23 as well. However, the sailing may not be smooth in the coming months as there are choppy waters ahead. The much talked about recession in the West has made companies put their large RFPs on hold and focus on taking office spaces only for expansion.

There is pressure on companies to cut costs and they are going slow on incremental hirings. Having said that, a record number of people were hired by IT companies and the GCCs/GICs over the past 2 years and the office space take up was not commensurate with their hiring. With employees returning back to their offices, there is increased pressure on companies to take up new spaces. This coupled with the trend of premiumization and the desire to aspirational office ecosystems to the returning employees would help us alleviate the impact of global headwinds.

The shift to quality is more prominent in the occupier segments that we target and as a result we have recorded second consecutive year of 4 msf of leasing. This has helped committed occupancy in our portfolio rise by c. 470 bps during the year to touch 89.0%. Our in-place rents have grown by c.5.7% from H 61.7 psf pm to H 65.2 psf pm. Our NOI has grown by 13.2% to reach H 17.1 billion.

REITs have continued to receive support of Government and Regulator. They acknowledge the importance of this asset class for unlocking value for their National Monetization Pipeline (NMP). We are hopeful that they would come out with a policy under the existing SEZ Act to permit partial denotification of SEZ spaces soon. This would help us ramp up our occupancies further by leasing the vacant SEZ spaces in our parks.

The awareness of REIT as an asset class that delivers stable returns is increasing and helping us attract a wider gamut of investors both on the equity as well as debt side. Our equity unitholder base has more than doubled during the financial year to cross the 50,000 mark and has grown 6.3x since our listing in August 2020. We expect this to grow further the coming years.

With our low loan-to-value of 17.9% and conservative debt strategy of having a well staggered book we have been able to target insurance companies and pension funds to our debt book.

We continue on our journey of becoming a leader in ESG. After completing our maiden green bond issuances in March, we intend to do more such issuances in the future. This money would go into creating green assets that would help mitigate the impact of climate change. We will continue to increase our share of renewable energy in our parks in line with our commitment towards the RE100 initiative.

With rising interest rates, there would be pressure on landlords and PE funds to exit bringing more opportunities in the market. The low LTV ratio would help us undertake such opportunities as and when they arise.

We have a Senior Management that has been in this industry for over 2 decades having experienced multiple cycles. This experience will help us navigate any choppy waters and create long term value to our unitholders.

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Mar 31, 2022

The discussion and analysis of our financial condition and results of operations that follow are based on our Audited Consolidated Financial Statements of Mindspace REIT and the Asset SPVs (together known as “Mindspace Group”) for the year ended March 31, 2022 prepared in accordance with Indian Accounting Standards and applicable REIT regulations.

Consolidated FY22 numbers reflect 12 months financial performance of the Asset SPVs. However, in FY21, the acquisition of Asset SPVs by Mindspace REIT was effected on July 30, 2020. Consequently, consolidation of financials of these Asset SPVs with Mindspace REIT has been done effective August 01, 2020 and therefore, Consolidated FY21 numbers reflect 8 months financial performance of the Asset SPVs. Hence, the numbers for FY22 and FY21 are not comparable. However, for comparison purpose with FY22 figures, in the section Comparison of Pro Forma Financial Numbers and Movement in revenue from operations and NOI by assets, we have provided pro forma Revenue from Operations and Net Operating Income for the twelve-month period from April 01, 2020 to March 31, 2021.

This discussion contains forward-looking statements that involve risks, uncertainties and assumptions, which could cause actual results to differ materially from those forecasted and projected. The ‘Risk Factors’ section included in this Annual Report discusses a number of factors and contingencies that could affect our financial conditions and results of operations.

All the financial numbers in this section have been rounded off to the nearest million unless otherwise stated.

Using downtime to upgrade our offerings

While the two waves of the pandemic did cause temporary disruptions and came with its own set of challenges the downtime helped us revamp and transform our business parks improving the marketability quotient. Apart from the carrying out our planned building fagade upgrades, we were able to add - new biophilia art installations, recreational areas, retail spaces and boardwalk to improve navigation within our parks. The recently opened 1 km long skywalk at Mindspace Madhapur is one such example. The skywalk has not just helped to reduce the discomfort caused by vehicular traffic to pedestrian movement, but also led to significant reduction of carbon footprints generated by last mile transportation of vehicles as well as reducing the noise and traffic within our parks. The skywalk also houses a Vantage Cafe along with kiosks and breakout spaces providing food, recreation and entertainment offerings. As our occupiers and their employees, begin to return to office, they are pleasantly surprised by the transformation and the stress-free travel to their office spaces. It is fast becoming a new landmark for the city of Hyderabad. Many such interventions will change the face of workspaces.

Readying for upsurge in leasing demand

We are optimistic about the leasing outlook on the back of robust hiring in IT, potential for GCC expansion in the country and our presence in right micro-markets with right offerings, As a result, we are aggressively looking at bringing more supply in our micro-markets. The key projects in the pipeline include potential redevelopment at Mindspace Madhapur (c.1.3 msf), multiple buildings at Gera Commerzone Kharadi (1.7 msf), data center building at Mindspace Airoli West (0.3 msf) and several other projects.

Mindspace REIT Overview

Mindspace REIT owns a quality office portfolio across four key office markets of India, i.e. Mumbai Region, Pune, Hyderabad, and Chennai. The portfolio comprises five integrated business parks and five quality independent offices. With a total leasable area of c.31.8 msf (24.2 msf completed; 3.0 msf under construction; 4.6 msf future development), it is one of India’s largest Grade A office portfolios. Mindspace REIT’s focus is on building a community-based ecosystem to meet the demands of “new-age businesses" while maintaining high safety and quality standards. Our parks are distinguished by their scale and thus making us the preferred partner of both domestic and foreign multinational corporations.

These assets are located in the established micro-markets, with proximity and/or connectivity to major business, social, and transportation infrastructure. We have built a significant presence in the portfolio markets where we operate and have meaningfully contributed to the evolution of these markets.

As of March 31, 2022, the portfolio is well diversified with over 175 tenants. Our diversified tenant base comprises a mix of Indian and foreign multinationals, including affiliates of Accenture, Qualcomm, Cognizant, L&T, Wipro, IDFC, Barclays and Amazon, among others. No single tenant contributes more than 6.0% of gross contracted rentals as on March 31, 2022. While tenants from the technology sector traditionally comprised our largest tenant base, our sectoral mix is diversified with non-technology sectors contributing to 57.7% of our gross contracted rentals. Technology, financial services and telecom and media constitute our

three largest sectors with contribution to Gross Contracted Rentals of 42.3%, 18.4% and 10.6%, respectively as on March 31, 2022. Approximately 77.2% and 29.4% of Gross Contracted Rentals come from leading multinational corporations and Fortune 500 companies, respectively.

Our unwavering focus of attracting and retaining the best tenants in our portfolio continues. This approach has stood the test of challenging times as we have been able to collect over 99% of our contracted rentals even during peak of pandemic. Our long-standing relationship with our tenants has helped the portfolio see our tenants grow across various parks within the portfolio. Our focus on constant engagement with our existing and potential tenants, has enabled us to expand our tenant universe as we grow with our existing tenants.

REIT clocks a strong year of leasing

FY22 started with imposition of restrictions to combat the second wave. At the same time, the Government of India accelerated the vaccination drive and was able to vaccinate majority of eligible adult population by end of the financial year. As the second wave started receding, the leasing demand picked up and we were able to lease 3.8 million in first nine months of FY22. The physical occupancies also started to improve from September 2021 onwards. However, the third wave marginally paused the leasing momentum forcing occupiers to postpone their return to office plans. Despite the disruptions caused by two waves, we recorded one the best years of leasing and leased 4.5 msf (including hard option area). Our ROFO assets also witnessed strong leasing traction during full year FY22, as all three ROFO assets cumulatively saw leasing of 2.9 msf during the year.

The Evolving Business Dynamics

The pandemic has altered our way of life for all and accentuated few trends which probably would have taken years if not decades to achieve. We expect a significant growth in Grade A office demand to come on account of these transformations.

Change in Occupiers’ definition of grade A

As envisaged, occupiers do not want to risk or compromise on asset quality as they restart their journey towards office occupancy. There is a strong desire to create and provide wellness and experiential work environments. We had anticipated this trend to play out. Strata sold assets are now no-longer considered Grade A by a significantly large segment of top-notch occupiers. Occupiers are now keen to shift out of strata-sold assets, given the challenges associated with negotiating with multiple landlords to implement health and safety protocols. As a result, they are willing to pay premium for institutionally-owned Grade A buildings. During the financial year, we witnessed a key BFSI tenant move out of an erstwhile strata-sold asset in BKC into our building in BKC. We see this shift happening at our other parks as well.

Strengthening of India’s potential as GCC hub

The ability of Indian services sector to deliver even during peak of pandemic has won it accolades globally. It has further reinforced India’s credibility as a global offshoring hub. In FY21, India had over 1,430 GCCs employing 1.38 million people. The number of GCCs are expected to grow at a CAGR of c.6-7% and reach c.2,000 and their headcount is expected to grow almost 2x at a CAGR of c. 12% reaching c. 2 million by FY25. India has the largest availability of STEM (Science, Technology, Engineering and Mathematics) talent and this coupled with availability of office spaces at near sub-dollar rents fortifies the case of setting up new GCCs in India’s favour.

Indian IT industry at its new inflection point

Technology companies played a pivotal role as the world moved to a remote working environment. Companies globally have accelerated their digitization plans and spends. The impact is visible in the results of Indian IT companies and their hiring trends. Indian IT companies have hired a record number of people since the pandemic and reported strong addition to the headcount to cater to their renewed business prospects.

The IT growth which started after Y2K was largely driven by cost arbitrage models. However, the next wave would be driven by high value intellectual services like - machine learning, artificial intelligence, business automation, data mining, data analytics and cloud adoption. Such cutting-edge services command a premium and are delivered by organizations with top notch talent. The ability and the desire of the occupiers to provide a high quality environment for their human capital favor Grade A landlords like us.

NASSCOM research suggests the technology services industry is estimated to be worth $ 227 billion in FY22.

The headcount of IT companies in India is now estimated to reach an all-time high of 5.1 million employees at the end of FY22, representing a net employee addition of c.4,45,000 employees during the financial year. The top 10 IT companies alone have added c.2,15,000 employees during the period of 9M FY22, which is ~2.0x times the net additions during pre-COVID-19 levels of FY19. According to NASSCOM, the industry has hired freshers in bulk in order to meet the growing digital demand. Fresher hiring has acted as a cost management tool for the companies by flattening the pyramid. This ensures the robustness of the industry and is visible in the share of employee cost in revenue. Addition of new hires, especially freshers, has led to employers revisiting the need for training, induction, collaboration, etc. further strengthening the relevance of office infrastructure.

Importance of office space coming to the fore

While working from home provides flexibility and comfort, it cannot replace the collaborative atmosphere and social interactions a physical office space fosters. Employees and employers are starting to realise that permanent remote work could mean a blurring of work-life boundaries and missed opportunities for mentorship and office camaraderie. Many companies have started calling employees back to office. If we refer to Q4 FY22 results of Indian IT companies, several companies have indicated that they have started calling employees back to office in multiple phases. While the number of days a week that an employee is required to attend office is still being evaluated, one thing is becoming evident is that office is going to be the center of future workplace models.

Our conversation with tenants and on-ground park attendance are indicating significant ramp up in physical occupancy at our parks as we head into the new financial year. We expect it to improve jump further by second half of FY23. With IT companies and GCCs having hired record number of people including freshers, they will have to expand their office footprint to cater to this new hiring.

Risks factors

Risks and concerns affecting our operations are captured in section ‘ Risk factors’ on'' Page 107-1101

Basis of Preparation of Consolidated Financial Statements

Please refer Basis of preparation stated in Consolidated financial Statements on'' Page 233-234

Summary of significant accounting policies

Please refer Significant Accounting Policies stated in Consolidated financial Statements on MPaBliEE!4IK4M

Principal components of consolidated statement of profit and loss

Our revenue from operations comprises the following sources: (i) facility rentals; (ii) income from maintenance services; (iii) revenue from works contract services; (iv) revenue from power supply; and (v) other operating income.

Facility rentals

Revenue from facility rentals comprises the base rental from our properties, fit-out rentals and income from car parking and others and certain Ind-AS adjustments to reflect the impact of straight lining of leases and discounting of security deposits.

Base rentals: Base rentals comprise rental income earned from the leasing of our assets.

Fit-out rentals: For some of our tenants, we provide customized alterations and enhancements as per the tenants’ requirements. Generally this is recovered through fit-out rental.

Income from car parking and others: Primarily, includes income from car park, kiosks, signage, ATMs, promotional events, among others.

Income from maintenance services

Income from maintenance services consists of the revenue that we receive or is receivable from tenants for the Common Area Maintenance (CAM) services provided as per the terms of agreement with the tenants, and also includes revenue from common area maintenance services provided to third parties, if any, located within the assets.

Revenue from works contract services

Revenue from works contract services includes revenue earned from construction of building for the tenants based on their specification and requirements.

Revenue from power supply

Revenue from power supply includes income from supply of power to tenants within the notified SEZ.

Other operating income

Other operating income primarily includes (i) interest income from finance lease, which comprises interest income from fit-out rentals where such leases are classified as finance leases. Leases are classified as finance leases when substantially all the risks and rewards of ownership is transferred to the lessee; (ii) income from sale of surplus construction material and scrap; and (iii) service connection charges for power supply and other charges.

Interest income

Our interest income comprises the following sources: interest income on (i) loans to body corporates; (ii) fixed deposits with banks; (iii) electricity deposits; (iv) income-tax refunds, and (v) others.

Other income

Our other income primarily comprises: (i) gain on redemption of preference shares; (ii) gain on redemption of mutual fund units; (iii) Liabilities no longer required written back, and (iv) miscellaneous income and (v) profit on sale of assets.

Comparison of financial numbers
	FY22		FY21
(f million)	Amount	Share (%)	Amount (Pro-forma)	Share (%)
Facility rentals	14,185	81.1%	13,241	81.3%
Maintenance services	2,635	15.1%	2,463	15.1%
Revenue from power supply	440	2.5%	460	2.8%
Other operating income	241	1.4%	129	0.8%
Total Revenue from Operations	17,501	100.0%	16,293*	100.0%
Direct Operating Expenses#	2,637	15.1%	2,552	15.7%
Net Operating Income	14,864	84.9%	13,741	84.34%
‘Excludes revenue from works contract services in Gera Commerzone Kharadi #Include net margin from works contract

Revenue from operations increased by 7.4% from f 16,293 million (pro-forma) in FY21 to f 17,501 million in FY22 primarily on account of:

¦ An increase in facility rentals from f 13,241 million (pro-forma) to f 14,185 million

¦ An increase in income from maintenance services from f 2,463 million (pro-forma) to f 2,635 million

Expenses

Our expenses primarily comprise: (i) cost of work contract services (ii) cost of power purchased (iii) employee benefit expenses (iv) cost of property maintenance services (v) repairs and maintenance (vi) other expenses (vii) depreciation and amortization expenses (viii) finance costs

(i) Cost of work contract services

Cost of work contract services is the expenses incurred towards construction of a building, based on agreed specifications and requirements, pursuant to the works contract executed by KRC Infra with respect to the portion of land owned by the counterparty.

(ii) Cost of power purchased

Cost of power purchased is cost incurred for purchase of power, transmission charges and related expenses with respect to supply of power to tenants within the notified SEZ.

(iii) Employee benefits expenses

Employee benefits expenses primarily include salaries and wages, contribution to provident and other funds, gratuity expense, compensated absences and staff welfare expenses.

(iv) Cost of property management services

Cost of property management services primarily include expenses incurred for facility maintenance services.

(v) Repairs and maintenance

Repairs and maintenance expenses primarily include expenses incurred on repairs and maintenance of buildings and plant and machinery and electrical installation.

(vi) Other expenses

Other expenses primarily comprise property tax, electricity, water and diesel charges, brokerage and commission, business support fees paid to the KRC group, rates and taxes, corporate social responsibility expenses and business promotion and advertisement expenses.

Earnings before finance costs, depreciation and amortization, regulatory income/expense and tax

We have elected to present earnings before finance costs, depreciation and amortization regulatory income/expense and tax as a separate line item on the face of the statement of profit and loss.

EBITDA is generally defined as net profit before interest expense, taxes, depreciation and amortization. However, Ind AS 114 (Regulatory Deferral Accounts) requires the movement in all regulatory deferral account balances to be distinguished from other income and expenses. Hence, for the purpose of Consolidated Financial Statements, included in this Annual Report, net movement in regulatory deferral

account balances has been disclosed separately in the Statement of Profit and loss after ‘Profit before rate regulated activities and tax’ and thus does not form part of EBITDA.

(vii) Depreciation and amortization expenses

Depreciation and amortization expenses comprise the depreciation of property, plant and equipment; depreciation of investment property; amortization of intangible assets and amortization of right of use of assets.

(viii) Finance costs

Finance costs primarily comprise: (1) interest expenses on (i) borrowings from banks and financial institutions; (ii) debentures; (iii) lease liability; and (iv) others; (2) unwinding of interest expenses on security deposits; and (3) other finance charges. We capitalize borrowing costs in relation to under construction properties. Once construction is completed, the interest cost is charged to our statement of profit and loss, causing an increase in finance costs.

Regulatory income/expense

As a deemed power distribution licensee in the SEZ area, some of our Asset SPVs charge tenants tariff on power consumption that is pre-approved by the state regulatory authority, Maharashtra Electricity Regulatory Commission (MERC). Accordingly, we file a tariff petition for the based on projected expenses and revenue. MERC reviews the tariff petition and approves expenses and revenue in compliance with the tariff regulations. Subsequently, we submit our audited accounts to MERC to undertake a truing up process, wherein MERC compares the actual expenses and revenue with the approved expenses and revenue for the past year, and allows total revenue gap/(surplus) to be recovered in the succeeding year’s tariff. As a result, there is an increase/ (decrease) in succeeding year’s tariff based on past year’s revenue gap/(surplus), and this change is referred to as impact on account of true-up. Such revenue gap/(surplus) for the past year is recorded as regulatory income/expense in the financials.

Tax expense

Tax expense comprises: (1) current tax and (2) deferred tax charge (net).

The Indian Income Tax Act provides companies an option to discharge their income tax liability at a concessional rate of 25.17% (including cess and surcharge) subject to fulfilment of certain conditions which includes opting out of other applicable tax holiday claims/incentives/tax exemption and utilizing MAT credit (“New Tax Regime”). With respect to the Consolidated Financial Statements as of and for the year ending March 31, 2022, and for the year ending March 31, 2021, we have not opted for the New Tax Regime and continue to discharge our income tax liability as per the existing tax regime.

During FY22 we achieved

¦ Gross leasing of c.4.5 msf

¦ New and vacant leasing of c.2.3 msf

¦ Contracted lease escalations on c.8.3 msf area

¦ Re-leasing spread of 31% over 2.8 msf area (incl. releasing and vacant area leasing)

Direct operating expenses (including net margin from works contract) increased in line with the increase in revenue from operations. The NOI margins rose to c.84.9%.

(f million)	Values
FY21 (Pro-forma)	13,741
Contractual and others (1)	404
Rent from Mark-to-Market Opportunity	113
Rent from Vacant Area (2)	146
Rent from New Area (3)	460
FY22	14,864

1. Includes contractual escalations, reduction in rent on account of area vacated; others primarily include NOI from in-house facility management division, Income from Finance Lease Receivable, Net Power Income, impact of Ind AS adjustments, downtime vacancy allowance and other direct operating expenses

2. Incremental rent from area which was not generating rent as on 31, March 21

3. Incremental rent from new area which started generating rent for the first time

Movement in revenue from operations and NOI by assets(3)
Assets	Revenue ('' Mn)		Change	NOI		Change
	FY22	FY21	%	FY22	FY21	%
Mindspace Airoli (E)	3,527	3,578	(1%)	2,837	2,823	0%
Mindspace Airoli (W)	2,058	2,040	1%	1,571	1,623	(3%)
Mindspace Malad	813	774	5%	714	690	3%
The Square BKC	72	-	NC	59	-	NC
Mumbai Region	6,470	6,392	1%	5,180	5,136	1%
Gera Commerzone Kharadi	1,334	1,010	32%	1,138	846	35%
The Square Nagar Road	478	624	(23%)	368	512	(28%)
Commerzone Yerwada	1,625	1,535	6%	1,337	1,259	6%
Pune	3,437	3,169	8%	2,843	2,617	9%
Mindspace Madhapur	7,378	6,591	12%	6,503	5,827	12%
Mindspace Pocharam	91	105	(13%)	61	85	(28%)
Hyderabad	7,469	6,696	12%	6,564	5,912	11%
Facility Management Business(1)	821	399	106%	253	125	102%
Others (2)	93	20	NC	23	(48)	NC
Inter Company Eliminations	(790)	(383)	NM	-	-	NM
Total	17,501	16,293	7%	14,864	13,741	8%

NM = Not meaningful; NC = Not comparable

1. KRC Infra has commenced facility management business from October 1, 2020 under brand name “CAMPLUS"

2. For FY22, ''Others'' includes Commerzone Porur. However, for FY21, ''Others'' includes Commerzone Porur and also The Square BKC, hence, the numbers for the 2 financial years are not comparable

3. All FY21 numbers are on pro-forma basis

NOI came in higher at '' 14,864 million in FY22 as compared

to '' 13,741 million in FY21 primarily due to following

reasons:

¦ Mindspace Airoli East: Higher on account of increase in Ind AS income, other operating income and net power income offset by re-leasing downtime on c.1.2 msf area, exits of 0.6 msf over FY21 and FY22 and lower net CAM margin in FY22

¦ Mindspace Airoli West: Lower due to increase in provision of property tax for buildings currently under assessment partially offset by higher Ind AS adjustments and higher net power income

¦ Mindspace Malad: Higher due to increase in Ind AS income partially offset by lower other operating income

¦ Mindspace Pocharam: Lower on account of exits of c.

0.1 msf over FY21 and FY22 and lower net CAM recovery

¦ Gera Commerzone Yerwada: Higher primarily on account of escalations over c.1.2msf and re-leasing of c .0.2 msf area over FY21 and FY22

¦ The Square BKC: Higher primarily on account of Ind-AS adjustment due to leasing of the asset in FY22

¦ Commerzone Porur: Higher on account of leasing of 0.3msf new area over FY21 and FY22 and higher Ind AS income

¦ Gera Commerzone Kharadi: Higher on account of annualization impact of rent for the full year FY22 on account of leases for which rents commenced during the year FY21

¦ The Square Nagar Road: Lower on account of re-leasing downtime on of 0.2 msf over FY21 and FY22, lower fit-out income and lower net CAM recovery

¦ Mindspace Madhapur: Higher on account of leasing of new area c.0.3 msf, leasing of 0.9 msf vacant area and mark-to-market impact on 1.3 msf area and escalations on 5.0 msf over FY21 and FY22, increase in fit-out rent, increase in Ind-AS income and increase in other operating income and reduction in rent from exits of c.1.2 msf area over FY21 and FY22

¦ Facility Management Division: Additional NOI on account of full year operations in FY22 vis-a-vis operations of

six months in FY21 as facility management division commenced from October 1, 2020

Note:

¦ Ind-AS adjustments refer to fair valuation of security deposits received and straight lining adjustments with respect to lease rent

¦ All FY21 numbers are on pro-forma basis

Profit and Loss statement analysis
(In '' million)	For the year ended March 31, 2022 (Audited)	For the year ended March 31, 2021 (Audited)	Change y-o-y (%)
INCOME AND GAINS
Revenue from operations	17,501	11,381	53.8%
Interest	107	133	(19.3%)
Other income	88	51	74.2%
Total Income	17,696	11,565	53.0%
EXPENSES
Cost of work contract services	-	274	(100%)
Cost of materials sold	6	2	222.3%
Cost of power purchased	444	341	30.0%
Employee benefits expense	226	115	96.4%
Cost of property management services	398	191	108.1%
Trustee fees	2	2	0.0%
Valuation fees	9	9	(4.9%)
Insurance expense	86	57	51.7%
Audit fees	19	23	(19.1%)
Management fees	500	316	58.5%
Repairs and maintenance	539	416	29.6%
Legal & professional fees	113	138	(17.8%)
Impairment Loss	-	176	(100.0%)
Other expenses	1,510	913	65.4%
Total Expenses	3,853	2,973	29.6%
Earnings/(loss) before finance costs, depreciation and amortisation, regulatory income / expense and tax	13,843	8,592	61.1%
Finance costs	2,644	1,707	54.9%
Depreciation and amortisation expense	3,289	2,091	57.3%
Profit/(loss) before rate regulated activities and tax	7,910	4,794	65.0%
Add : Regulatory income/ (expense) (net)	76	32	137.2%
Add : Regulatory income/(expense) (net) in respect of earlier years	-	(33)	(100.0%)
Profit before exceptional items and tax	7,986	4,794	66.6%
Exceptional Items (refer note 55)	(843)	-
Profit/(loss) before tax	7,143	4,794	49.0%
Current tax	1,767	1,033	71.1%
Deferred tax	903	412	119.3%
Tax expense	2,670	1,445	84.8%
Profit/(Loss) for the period/year	4,473	3,349	33.6%
Profit/(Loss) for the period/year attributable to unit holders of Mindspace REIT	4,238	3,075	37.8%
Profit for the period/year attributable to non-controlling interests	235	274	(14.4%)
Our revenue from operations and Profit for FY22 stood at '' 17,501 million and '' 4,473 million, respectively.

Cash flow from operating activities

Net cash generated from operating activities for FY22 was '' 11,598 million. Our profit before tax was '' 7,143 million, which was adjusted for non-cash and items relating to financing and investing activities, by a net amount of '' 6,754 million, primarily for finance costs amounting to '' 2,644 million, depreciation and amortization expenses amounting to '' 3,289 million. Our changes in working capital primarily comprised an increase in trade payables of '' 179 million, an decrease in trade receivables of '' 2 million, a decrease in inventories of '' 13 million, and increase in other non-current and current assets (including financial assets) of '' 649 million, an increase of other non-current and current liabilities (including financial liabilities) and provisions amounting to '' 12 million and, decrease in regulatory liabilities of '' 76 million. In addition, we paid income tax of '' 1,780 million and had exceptional items to the tune of '' 843 million.

Summary of cash flow statement
(In '' million)	FY22 Consolidated	FY21 Consolidated
Net cash generated/(used in) from operating activities	11,598	7,978
Net cash (used in)/generated from investing activities	(4,558)	9,414
Net cash generated used in financing activities	(7,523)	(15,044 )
Net increase/(decrease) in cash and cash equivalents	(483)	2,348
Cash and cash equivalents at the beginning of the period/year	1,465	-
Cash and cash equivalents acquired due to asset acquisition	-	(883)
Cash and cash equivalents at the end of the period/year (Net of book overdraft)	982	1,465
Cash and cash equivalents comprises of
Cash on hand	2	2
Balance with banks
- on current accounts	3,046	3,060
- in escrow accounts	0	64
Deposit accounts with less than or equal to three months maturity	430	413
Cash and cash equivalents at the end of the period/year	3,478	3,539
Less : Bank overdraft	(2,496)	(2,074)
Cash and cash equivalents at the end of the period/year (Net of book overdraft)	982	1,465

Liquidity and capital resources Overview

Our low leverage and robust credit profile offer adequate headroom for future growth.

For the year ended March 31, 2022, we,

¦ Raised ? 9 billion in fixed cost debt from financial institutions at Mindspace REIT and Sundew SPV level via issuance of NCDs bearing coupon ranging between 6.1% to 6.35% on p.a.p.q. basis

- We strategically increased our exposure to fixed cost debt to c. 45.9% of our total outstanding debt, cushioning us against the rising interest rate regime

¦ We have availed new facilities worth ? 7.75 billion at SPV level from various banks in the form of lease rental discounting, overdraft and term loans.

¦ Debt raised during the year was predominantly used for refinancing existing debt and to fund capital expenditure

Our finance costs for FY22 stood at ? 2,644 million. Our weighted average cost of borrowings stands at c.6.6% at the end of March 2022, lower by c.260 bps from c.9.2% at the end of March 2020 and c. 50 bps lower than c.7.1% at the end of March 2021. Our weighted average term to maturity for borrowi ngs stands at c. 5.0 years at the end of March 2022.

Financial Resources

As of March 31, 2022 our cash and cash equivalents stood at '' 3,478 million. Cash and cash equivalents primarily consist of balances with banks in current accounts, deposit accounts with original maturity below three months and cash on hand. Our undrawn facilities stood at '' 6,726 million.

We maintain a strong liquidity position consisting of cash and treasury balances.

Cash flow from investing activities

Net cash used in investing activities was '' 4,558 million for FY22, primarily comprising interest received on intercorporate loans of '' 37 million which was primarily offset by expenditure incurred on investment property and investment property under construction, including capital advances, net of capital creditors, property, plant and equipment and intangible assets of '' 5,742 million, primarily with respect to Mindspace Airoli West, Gera Commerzone Kharadi, Mindspace Madhapur (Sundew) and Commerzone Porur, and net investment in fixed deposits of '' 65 million.

Cash flow from financing activities

Net cash utilized in financing activities was '' 7,523 million for FY22, primarily comprising proceeds from issue of non -convertible debentures of '' 9,000 million which was offset by net repayment of external borrowings of '' 2,430 million, finance costs paid of '' 2,125 million, dividends paid

(including tax) of '' 11,892 million and expenses incurred towards the IPO and issue of non-convertible debentures of '' 61 million.

Distributions

NDCF of Mindspace REIT is based on the cash flows generated from its assets and investments. In terms of the REIT Regulations, not less than 90% of the NDCF of each of the Asset SPVs is required to be distributed to Mindspace REIT, as the case may be, in proportion of their shareholding in the Asset SPVs, subject to applicable provisions of the Companies Act or the LLP Act. NDCF to be received by Mindspace REIT from the Asset SPVs may be in the form of dividends, interest income, principal loan repayment or proceeds of any capital reduction or buyback from the Asset SPVs, sale proceeds out of disposal of investments if any or assets directly held by Mindspace REIT or such other form as may be permitted by the REIT Regulations. Further, Mindspace REIT is required to distribute at least 90% of its NDCF to the unitholders.

The Manager is required to declare and distribute at least 90% of the NDCF of Mindspace REIT as distributions (REIT Distributions) to the unitholders. Such distributions are to be declared and made for every quarter of a financial year. The first distribution was made upon completion of the first full quarter post the listing of Units, i.e. for the quarter ending December 31, 2020. Further, in accordance with the REIT Regulations, distributions need to be made within 15 days from the date of such declarations.

For FY22, we declared a distribution of '' 18.45 per unit, comprising '' 17.12 per unit as dividend, '' 1.32 per unit as interest payment and '' 0.01 per unit as other income. On an annualized basis, based on the issue price of '' 275 per unit, the distribution yield stood at 6.7%.

Tax implications of distributions

As per provisions of section 115UA of the ITA, income distributed by REIT is taxable in the hands of the unitholders in the same manner and proportion as the underlying income stream received by the REIT.

Planned development

Please refer to page 26 to 31 for an update on under- construction assets and upgrade activities.

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Mr. Shubhendu Saha, MRICS, in conjunction with market report prepared by Cushman & Wakefield (CWI), who has been appointed by K Raheja Corp Investment Managers LLP as an independent consultant to carry out industry and market research, carried out our annual valuation as an independent valuer and valued our portfolio at '' 263,996 million with 91.7% of value in completed assets, underpinning Mindspace Business Parks REIT’s asset quality as of March 31, 2022 NAV of the portfolio stood at '' 364.9 p.u. as on March 31, 2022.

Capital expenditure and capital investments

Capital expenditure comprises additions during the financial year to property, plant and equipment, capital work-in progress, investment property, intangible assets and investment property under construction. During FY22, we incurred capital expenditure of '' 5,742 million, primarily for the construction activity at Mindspace Airoli West, Gera Commerzone Kharadi, Mindspace Madhapur (Sundew) and Commerzone Porur and re-energizing out assets via upgrades and infrastructure upgrades. Our capital commitments (net of advances) as at March 31, 2022 was 7,338 million.

improving occupancy

Our committed occupancy for the year remained stable at 84.3% including the pre-leasing in our under-construction assets, the committed occupancy stood at c. 85.0%.

The back-to-office momentum is strengthening for large companies, and we are optimistic that the smaller ones will follow soon, thereby increasing takers for vacant spaces.

Growing the portfolio

We are constantly evaluating opportunities to grow the portfolio both organically and inorganically. Looking at the space take up in our under-construction assets on account of robust demand from large occupiers, we have decided to advance the construction timelines of our future developments. We have commenced construction of a new building in Commerzone Kharadi, Pune and the Club House in Hyderabad. For our new building in Pune, the revised Floor Space Index norms in Maharashtra enabled us to increase the leasable area of our new building from 0.6 msf to 1.0 msf. In addition, with the redevelopment of a building in Hyderabad the total leasable area of the REIT portfolio now stands at 31.8 msf, up from 30.2 msf at the end of FY21.

The REIT has also received ROFO notice from sponsor to acquire a 1.8 msf fully leased asset located in Madhapur, Hyderabad. This asset is located close to our Mindspace Madhapur Park and complements the existing offering. This opportunity is currently under evaluation.

We are constantly evaluating a number of opportunities to acquire assets from the market. However, the opportunity must be NAV and yield accretive to our unitholders.

Human Resource

We are proud to announce that Mindspace REIT is now ‘Great place to work’ certified. We have inculcated people-centricity in our work culture with the help of several initiatives which is reflected in the survey.

Promoting gender diversity has been at the core of our hiring policies and we have made significant strides in this regard. Women comprise 27% of our managerial workforce, which is amongst the highest in industry. Key portfolios of Finance, Accounts, Structural Engineering, Marketing, Human Resources, Corporate Communications have women at leadership roles. The ''Relaunch'' program initiated encourages staff who had taken a break from career to return to corporate world and we expect women to be major beneficiaries of the initiative. This will help further improve our gender diversity.

We always believe in giving equal opportunities and unbiased work employment to all our employees. We have conducted special workshops to sensitize our workforce towards LGBTQIA community as we intend to provide more employment opportunities to people from these groups.

Pandemic has been a challenging time as every individual was confined within the boundaries of their homes and had to alter their day-to-day routine. To help our employees cope with the challenging times, we partnered with ‘1-on-1 help’ to extend professional counselling to our employees and their families.

Internal Control Systems

Mindspace REIT has internal control systems commensurate with its size, scale and complexity to manage its operations, financial reporting, and compliance requirements. These systems have been designed to provide reasonable assurance with respect to recording and providing reliable financial and operational information in timely manner, prevention and detection of fraudulent practices, compliance with applicable laws, safeguarding assets from unauthorized use, executing transactions with proper authorization, and ensuring compliance with internal policies. The Manager has clearly articulated roles and responsibilities for all functional heads. Functional heads are responsible to ensure compliance with the policies and procedures laid down by the Manager.

The systems, standard operating procedures, and controls are implemented and reviewed by the leadership team.

Based on the findings, process owners undertake corrective measures in their respective domains, thereby strengthening the controls. DELOITTE HASKINS & SELLS LLP, who are the statutory auditors, audited the financial statements for REIT and each of the Asset SPVs as at March 31, 2022. They have expressed an unqualified opinion on the effectiveness of each Asset SPVs’ internal controls over financial reporting as of March 31, 2022.

industry structure and Development

Industry structure and development affecting our operations are captured on pages 58 to 64 of the Annual Report.

Outlook

Our business has demonstrated high degree of resilience during this environment, and we remain confident of the long-term fundamentals of Grade A commercial real estate in India.

While the leasing activity was subdued in calendar year 2020, 2021 was markedly different. As per Cushman & Wakefield research, the net leasing across the top six office markets was 18.8 msf recording a growth of 21.3% y-o-y despite the periods of extreme uncertainty caused by the second wave. The nationwide vaccination program carried

out by the Government and the recent decision to extend boosters doses for all adults has given the required fillip to occupiers to bring employees back to office.

In the first quarter of CY22, although the third wave slowed down the return to office plans of occupiers, the leasing momentum continued abated with top six markets recording a net absorption of 5.5 msf. With most state governments lifting almost all COVID-19 restrictions now and many companies charting out their return to office strategies, we expect the leasing momentum to growth stronger as we enter the new financial year. The demand is likely to be led by IT companies, GCCs and the migration to single owner Grade A spaces. Availability of credit to select Grade A developers and boom in residential sector is also expected to keep the upcoming supply in check.

During FY22, we were able to successfully increase our in place rent to '' 61.7, an increase of c.10%over March 21. We have expiries worth 1.1msf coming up for FY23, these leases offer an attractive MTM potential of c. 31% to us.

REITs continue to receive required policy supports from various regulatory bodies. We are hopeful that the Government will suitably amend the SEZ policy as they announced in the budget that would propel us in a new growth trajectory. The positive developments on the capital market side include amendments allowing FPIs and insurers to participate in REIT debt. We expect this to increase the depth of the debt market, widen the pool of investors, and allow us to avail a longer tenor debt at competitive rates .In a welcome move, SEBI has also reduced trading lot for REITs to one unit. This has resulted in expanding our unitholder base from 9,824 at the end of March 2021 to 24,683 at the end of March 2022.

We are committed to deliver operating growth and further enhance our occupancy in the coming year. With a low loan to value of 15.7%, we continue to follow a disciplined approach towards our balance sheet. We are pleased to announce we were able to demonstrate one of the strongest leasing year for our portfolio in FY22 despite macro level challenges. We are well geared to capture the sectoral tailwinds and deliver long term sustainable value to our unitholders.

Other Updates:

a) Sponsor, Manager, Trustee, Valuer, Directors of the Trustee/ Manager/Sponsor etc.

Change in Sponsor Group - Transfer of part of the Units held by Mr. Ravi Raheja to Ms. Sumati R Raheja (spouse of Mr. Ravi Raheja, who will be considered as a Sponsor Group of Mindspace REIT) on September 29, 2021.

There is no change in the Sponsor/ Manager /Trustee/ Valuer and change in Directors of Sponsor / Manager except of the Trustee where Mr. Sanjay Sinha has retired from the Board of the Trustee w.e.f. April 30, 2021 and Ms. Deepa Rath (holding Director Identification No. 09163254) has been appointed as a Director on the Board of the Trustee w.e.f May 1, 2021 for the full year ended March 31, 2022.

Mr. Alan Miyasaki (Non-Executive, Non-Independent member) has resigned from the Board w.e.f. 27^th December, 2021 and Mr. Manish Kejriwal (Non-Executive, Independent member), has been appointed on the Board w.e.f. 2^nd February, 2022.

b) Addition and divestment of assets including the identity of the buyers or sellers, purchase/sale prices and brief details of valuation for such transactions

Other than the sale of approximately 39.996 acres of land at Pocharam Village, Ghatkesar Mandal, Ranga Reddy District, Andhra Pradesh held by Mindspace Business Parks Private Limited (“Asset SPV”) to K. Raheja Corp Private Limited for a consideration of '' 1200 million, there was no addition or divestment of assets during the financial year ended March 31, 2022.

1 COVID-19 has caused a material decline in general business activity and demand for real estate transactions, and if this persists, it would adversely affect our ability to execute our growth strategies, including identifying and completing acquisitions and expanding into new markets.

Factors related to the COVID-19 pandemic, or a future pandemic, that could have an adverse impact on our financial condition, results of operations and cash flows, primarily include:

¦ a complete or partial closure of, or other operational issues at, one or more of our properties;

¦ tenants’ inability to pay rent on their leases, in part or full or our inability to re-lease space that is or becomes vacant;

¦ slowdown in getting lease commitments for new spaces;

¦ any impairment in value of our properties;

¦ an increase in operational costs; and

_¦ the extent of construction delays on our underconstruction properties due to work-stoppage orders, disruptions in the supply of materials, shortage of labour, delays in inspections, or other factors

2 Distributions to Unitholders will be based on the net distributable cash flows available for distribution. Our ability to make distributions to the Unitholders may be affected by several factors including

¦ business and financial position of Asset SPVs, debt servicing requirements of Asset SPVs,

¦ construction and leasing of under construction area,

applicable laws and regulations, which may restrict the payment of dividends by the Asset SPVs or other distributions.

3 The REIT Regulations impose certain restrictions on our operations, including maintaining a specific threshold of investment in rent generating properties and conditions on availing debt financing. These conditions may restrict our ability to raise additional funds as well as limit our ability to make investments.

4 Real estate markets are cyclical in nature, and a recession, slowdown or downturn in the real estate market as well as in specific sectors, such as technology, where our tenants are concentrated, increase in property taxes, changes in development regulations and zoning laws, availability of financing, rising interest rates, increasing competition, adverse changes in the financial condition of our tenants, increased operating costs, disruptions in amenities and public infrastructure and outbreaks of

infectious disease such as COVID-19, among others, may lead to a decline in demand for our Portfolio, which may adversely affect our business, results of operations and financial condition.

5 A significant portion of our revenues are derived from a limited number of tenants. Any conditions that impact these tenants could adversely affect our business, results of operations and financial condition. We are required by the terms of the lease deeds, grant documents or sale deeds with certain statutory authorities to lease a proportion of our Portfolio to tenants from the IT and ITES sectors. Some of the assets are large and contribute significantly to our revenue from operations resulting in asset concentration.

Assets are primarily located in four key office markets and select micro markets within these office markets resulting in market and micro market concentration.

6 Our title to the land where the Portfolio is located may be subject to legal uncertainties and defects, which may interfere with our ownership of the assets and result in us incurring costs to remedy and cure such defects. Any failure or inability to cure such defects may adversely affect the Portfolio including the rentals, which may also impact returns for the Unitholders.

7 Existing lease/license agreements are subject to risks including (i) non-renewal upon expiration, (ii) delay or failure in making rental payments by the lessees/ licensees, (iii) premature termination, (iv) failure to release or re-license the vacant space and our dependence on rental income may adversely affect our profitability, our ability to meet financial obligations and to make distributions to our Unitholders.

8 We may be unable to renew leases or license arrangements, lease or license vacant area or re-lease or re-license area on favourable terms or at all, which could adversely affect our business, results of operations and cash flows.

9 By letter dated September 11, 2020 to Horizonview, TNRERA stated that only real estate projects which are proposed to be let out on rent alone are not required to be registered with TNRERA and all other real estate projects whether allotted as freehold or leasehold are to be registered with TNRERA; therefore Horizonview is directed to register the Commerzone Porur project under section 3 of the RERA, before executing/registering lease deed with prospective lessees.

Horizonview has filed a response dated November 17, 2020 for inter alia re-iterating and clarifying the factual and legal position on grounds including that (i) the premises in the project are not contemplated to be allotted as freehold or leasehold; (ii) Horizonview is merely letting

Mr. Neel C. Raheja (designated partners of the Manager) to continue as designated partners of the Manager and directors on board of certain Asset SPVs, which may have an adverse effect on our business and reputation.

14 There are outstanding litigations, title irregularities and regulatory actions involving the Asset SPVs, which may adversely affect our business, results of operations and cash flows. For details, see “Brief details of material litigations and regulatory actions as at the year ended March 31, 2022” in this report.

15 Our business and results of operations are subject to compliances with various laws, and any noncompliances may adversely affect our business and results of operations. Our business is governed by various laws and regulations, including Transfer of Property Act, 1882, Special Economic Zones Act, 2005 and Special Economic Zone Rules, 2006, Maharashtra Industrial Development Act, 1961, Mumbai Metropolitan Region Development Authority Act, 1974, Maharashtra Information Technology and Information Technology Enabled Services Policy, 2015, rent control legislations of various states, municipal laws of various states and environment related regulations. Our business could be adversely affected by any change in laws, municipal plans or stricter interpretation of existing laws, or promulgation of new laws, rules and regulations applicable to us.

For instance, the Ministry of Corporate Affairs (MCA) has amended the Companies (Corporate Social Responsibility Policy) Rules, 2014 and has introduced the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (“CSR Rules”). The CSR Rules provides, among others, specific treatment of unspent CSR amount based on whether it pertains to an ongoing project. Any failure on the part of our Asset SPVs to make the necessary transfer towards CSR requirements and ensure compliance under the CSR Rules may result in penal actions being initiated against the relevant Asset SPV by the concerned regulatory authority.

16 The Ministry of Environment and Forests (“MOEF”) vide Office Memorandum dated May 1, 2018 (“CER OM”) had issued guidelines for recommending expenses towards ‘Corporate Environment Responsibility’ (“CER”) with a view to bring transparency and uniformity in imposition of expenses towards CER. Accordingly, conditions relating to CER were being imposed in the environment clearances relating to projects. Thereafter, CER OM was superseded by OM dated September 30, 2020 (“CER OM 2”) which directed that Expert Appraisal Committee (“EAC”) or State Level Expert Appraisal Committee (“SEAC”) shall deliberate on the commitments made by project proponent and prescribe specific condition(s) in physical terms while recommending the proposal, for grant of prior environment clearance instead of allocation of funds under CER. The CER OM 2 further directed that all the activities proposed by the project proponent or prescribed by the EAC/SEAC, as the case may be, shall be part of the Environment Management Plan (“EMP”). Consequently, CER OM is not valid and only (1) the commitments which are deliberated by EAC/SLEAC, and (2) specific conditions prescribed in physical terms

out premises on rent; (iii) the rights granted/ proposed to be granted by Horizonview are in the nature of a tenancy for a specified period; (iv) letting out of premises on rent by Horizonview will be governed by the provisions of the Tamil Nadu Regulation of Rights and Responsibilities of Landlords and Tenants Act, 2017 [“TNRRLTA”], which will apply to the letting out/leasing of premises by Horizonview in Commerzone Porur; (v) Horizonview and its tenants will be complying with Section 4 of TNRRLTA by filing the form with the Rent Authority, as specified in the First Schedule of the said Act; (vi) as confirmed by MahaRERA in its FAQs published on its website, the RERA Act does not include rental projects, lease / leave and License deals; and therefore, as the premises in the Commerzone project are to be let out/leased on periodical rent by Horizonview, and not to be allotted or sold (as freehold or leasehold) as contemplated of RERA, registration of Commerzone Porur project is not required under Section 3 of RERA.

Any delay in clarification and resolution of the issue with TN RERA, may result in Horizonview having to resort to legal remedies in respect of such clarification. Any unfavourable outcome may attract the provisions relating to registration under RERA and affect our ability to register the lease agreements with our tenants in this project.

10 Due to a variety of factors, including competitive pricing pressure in our markets, changing market dynamics including demand supply, a general economic downturn and the desirability of our properties compared to other properties in our markets, we may be unable to realize our estimated market rents across the properties in our Portfolio at the time of future leasing.

11 Valuation is an estimate and not a guarantee, and it is dependent upon the accuracy of the assumptions as to income, expense and market conditions. Further, the valuation methodologies used to value our Portfolio involve subjective judgments and projections, which may not be accurate. Valuation methodologies will also involve assumptions and opinions about future events, which may turn out to be incorrect. Further, valuations do not necessarily represent the price at which a real estate asset would sell, since market prices of assets can only be determined by negotiation between a willing buyer and seller. As such, the value of an asset forming part of our Portfolio may not reflect the price at which such asset could be sold in the market, and the difference between value and the ultimate sales price could be material.

12 We have certain contingent liabilities, which if they materialize, may adversely affect our results of operations, financial condition and cash flows. For details, see Note 44 to Notes to accounts- Contingent Liabilities of Condensed Consolidated Financial Statements for the financial year ended March 31, 2022.

13 Any appeal against the order of the Karnataka High Court dated June 12, 2019 in a Writ Petition quashing the list of disqualified directors issued by the Ministry of Corporate Affairs or any adverse orders in the pending review petition or any subsequent adverse developments, may affect the ability of Mr. Ravi C. Raheja and

while recommending the proposal need to be complied with. In view of the aforesaid, the respective Asset SPV’s have made or will make (if required) the aforesaid representations to MOEF authorities including during the MOEF hearings for grant of amended EC’s (if required) in respect of the respective REIT Assets, or table the same in the periodic reports being filed with the authorities. If any alternate view is taken by the MOEF authorities and despite the CER OM 2, the MOEF authorities mandate compliance of CER in accordance with CER OM, then Asset SPVs will have to incur additional expenses towards compliance of CER in accordance with CER OM and any delay or failure on the part of the respective Asset SPVs to make the necessary spending towards CER may result in penal actions being initiated against the relevant Asset SPV by the concerned regulatory authority.

17 Any non-compliance with, and changes in, environmental, health and safety laws and regulations could adversely affect the development of our properties and our financial condition. We are subject to environmental, health and safety regulations in the ordinary course of our business. If we face any environmental issue during the development of a property or if the government introduces more stringent regulations, we may incur delays in our estimated timelines and may need to incur additional costs.

18 Any delay, failure or inability on part of Asset SPVs to obtain, maintain or renew all regulatory approvals that are required for their respective business, may adversely impact our development and business.

19 For our assets located on land leased from MIDC and MMRDA, the relevant Asset SPVs are required to comply with the terms and conditions provided in the respective lease agreements with such government bodies. Any non-compliance by the Asset SPVs of the respective lease agreements with such government bodies or by the tenants of the terms of the lease deed executed with them, may result in the action by the regulatory authorities, including revocation/termination of lease, demolition of the construction, payment of fines, or inability to produce lease agreements as evidence of the fact in any court of law. In the event that our leases are revoked, not renewed or terminated prematurely, it could have an adverse impact on the Asset SPVs and in turn adversely affect our business, financial condition and results of operations.

20 Inability to access infrastructure, certain logistical challenges in new markets and our relative inexperience with newer markets, may prevent us from expanding our presence in new markets in India which may adversely affect our business, results of operations and cash flows.

21 We have entered and may enter into several related party transactions, which could involve conflicts of interest. The Manager may face conflicts of interests in choosing our service providers, and certain service providers may

provide services to the Manager, the Sponsor Group on more favourable terms than those applicable to us.

22 Some of our assets are located on land notified as SEZs and the Asset SPVs are required to comply with the SEZ Act and the rules made thereunder.

The income tax benefits available to SEZ developers have been withdrawn for the SEZs which have commenced development after March 31, 2017, while for their tenants/units, income tax benefits are available on income earned by them on account of the exports from the SEZs, provided they commence operations in the SEZs on or before March 31, 2021, if necessary approvals have been received by March 31, 2020. This may result in SEZs becoming less attractive for tenants in the future.

Further, some of our Asset SPVs have made applications for de-notifying certain land parcels notified as SEZs and hence they will be eligible to avail lower fiscal incentives than what were previously available to them, which may adversely affect our business, results of operations and financial condition.

23 Due to various regulatory and other restrictions, we may not be able to successfully meet financing requirements for completion of construction of Under Construction Area, construction of Future Development Area and for refurbishments, renovation and improvements beyond our current estimates

Our inability to raise adequate finances may adversely affect our business, results of operations and cash flows.

24 Liquidity in the credit market has been constrained due to market disruptions, including due to the COVID-19 pandemic or conflicts among other countries, which may make it costly to obtain new lines of credit or refinance existing debt. As a result of the ongoing credit market turmoil, we may not be able to refinance our existing indebtedness or to obtai n additional financing on attractive terms. Further, adverse economic conditions could negatively affect commercial real estate fundamentals and result in lower occupancy, lower rental rates and declining values in our Portfolio and in the collateral securing any loan investments we may make.

25 Our ability to make distributions to Unitholders could be adversely affected if expenses increase due to various factors. Also, any adverse tax changes or withdrawal of tax benefits may adversely affect our financial condition and results of operation.

Any maintenance or refurbishment may result in disruption of operations and it may not be possible to collect the full or any rental income on area affected by such renovations and refurbishment of our assets.

26 The restrictive covenants under the financing agreements, entered or to be entered into with various lenders or investors, from time to time, include or could include, among others, obtaining prior consent of the lenders (i) for change in the capital structure, (ii) for amendment of constitutional documents, (iii) for declaration of dividends/ distribution of profits in case of defaults, (iv) for incurring further indebtedness against the security provided, (v) for making any acquisition/disposal of assets and (vi) for providing surety or guarantee to any third party. These or other limitations may adversely affect our flexibility and our ability to make distributions to our Unitholders.

27 We are not fully insured against some business risks and the occurrence of accidents that cause losses in excess of limits specified under our policies, or losses arising from events not covered by our insurance policies, such as damage caused to our property and equipment due to war, which could adversely affect our business and results of operations.

While we believe that we have industry standard insurance for our Portfolio, if a fire or natural disaster substantially damages or destroys some or all of our assets in the Portfolio, the proceeds of any insurance claim may be insufficient to cover any expenses faced by us, including rebuilding costs.

28 Under the REIT Regulations, a REIT is required to hold assets acquired by it for a period of three years from the date of purchase and in case of under-construction properties or under-construction portions of existing properties acquired by it, three years from the date of their completion. Additionally, any sale of property or shares of Asset SPVs exceeding 10% of the value of the REIT assets will require prior approval of the Unitholders. These factors could have an adverse effect on our business, financial condition and results of operations.

29 Any disagreements with our collaborators or joint venture partners or any delay or failure to satisfy the terms and

conditions set-out in the binding agreements with such collaborators or the joint-venture partners, may adversely impact our business and operations.

30 We do not own the trademarks or logos for “Mindspace”, “Mindspace Business Parks”, “K Raheja Corp”, “Commerzone” “CAMPLUS” and “The Square” that are associated with our Portfolio. Further, we do not own the trademark or logo for “Mindspace Business Parks REIT” and “Mindspace REIT”. These trademarks and logos are licensed to our Asset SPVs, the Manager and us, as applicable, by the Sponsors or Sponsor Group entities who are either the registered owners of these trademarks and logos or have made applications for registered ownership some of which are pending. We may not be able to prevent infringement of the trademark, and a passing off action may not provide sufficient protection. Accordingly, we may be required to litigate to protect our trademark and logo, which could be time consuming and expensive and may adversely affect our business and results of operations.

31 Our Asset SPVs may, in the future be exposed to a variety of risks associated with development of an Integrated IT Township, which may adversely affect our business, results of operations and financial condition.

32 Land is subject to compulsory acquisition by the government and compensation in lieu of such acquisition may be inadequate. Additionally, we may be subject to conditions of use or transfer of land wherever such land is subject to orders under the Urban Land (Ceiling and Regulation) Act, 1976.

33 The on-going Russia Ukraine conflict, supply chain disruptions, inflation / increase in commodity prices could result in wide range of economic consequences, and may indirectly / marginally impact projects under development and our business, results of operations and financial condition.