Crisil has assigned an AAA rating with a stable outlook to proposed long-term principal-protected market-linked debentures (MLDs) worth Rs 375 crore of Mindspace Business Parks real estate investment trust (Mindspace REIT).
Crisil also converted the provisional rating assigned to the Rs 300 crore non-convertible debentures (NCDs) to a final rating of AAA with a stable outlook.
The company has received draft term sheets for the MLDs of Rs 375 crore and NCDs of Rs 75 crore and the proposed terms and conditions are in line with those of the REIT's existing debentures. The already placed debentures incorporate covenants capping incremental debt throughout their tenure.
Consequently, these covenants will be applicable to the new instruments by default and hence, Crisil has converted the provisional rating on the NCDs of Rs 300 crore to a final rating.
Mindspace REIT is sponsored by the K Raheja Corporation. The REIT owns eight special purpose vehicles (asset SPVs) comprising 10 commercial offices, information technology parks and special economic zone assets, and houses the facility management division.
Crisil said the ratings continue to reflect Mindspace REIT's comfortable net loan-to-value (LTV) ratio, characterised by low debt, strong debt protection metrics supported by a cap on incremental borrowings, and stable revenue profile of the assets amid benefits of high occupancy and geographic diversification.
The strengths are partially offset by susceptibility to volatility in real estate sector, causing fluctuations in rental rates and occupancy levels.
Crisil combined the business and financial risk profiles of Mindspace REIT with those of its asset SPVs, in-line with its criteria for rating entities in homogeneous groups. This is because Mindspace REIT has direct control over the asset SPVs, and will support them in the event of any exigency.
( With inputs from ANI )
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