This is because Reits are required to distribute at least 90% of their net distributable cash flows to unitholders as dividends, ensuring a steady income stream. Recent regulatory changes have further enhanced their appeal.
The Securities and Exchange Board of India (Sebi) has recently reclassified Reits as equity, moving away from their earlier hybrid categorization. This is a significant shift with far-reaching implications for both the mutual fund and real estate sectors.
Until now, mutual funds were limited to investing only 10% of their net asset value (NAV) in Reits. With the new equity classification, this cap is removed, allowing mutual funds to invest in them in line with their overall strategy and mandate, just like any other listed stock.
This change is expected to boost mutual fund participation, enhance liquidity, and strengthen Reits’ long-term investment potential. Real estate developers may leverage the Reit route to monetize commercial assets. Among the listed Reits, Embassy Office Parks, Mindspace, and Brookfield India have emerged as key vehicles to ride this trend.
Embassy Office Parks Reit
Embassy Office, sponsored by Blackstone, is India’s first publicly listed Reit and Asia’s largest office Reit by area. Since listing in 2019, it has delivered an annualized total return of 10.5%, driven by an average capital appreciation of 3.3% (up to March 2025) and a distribution yield of 7.1% (based on the IPO price of ₹300 and total distributions paid out since listing).
Embassy owns and operates a 51.1 million square feet (msf) portfolio across 14 commercial office parks located in India’s high-performing office markets. Of this, 40.3 msf represents the completed operating area and is home to 272 of the world’s leading companies.
The majority of the portfolio is concentrated in Bengaluru (75% of gross asset value or GAV), followed by Mumbai (9%), Pune (7%), Noida (6%), and Chennai (3%). Portfolio occupancy stands at 91% by value and 87% by area. Among cities, Mumbai leads in occupancy (100%) by value, followed by Chennai (95%) and Bengaluru (92%).
Global capability centres (GCCs) and technology companies together make up over 70% of the occupier base. Notably, seven of the world’s top thirty companies by market capitalization are among Embassy Reits’ tenants. The weighted average lease expiry stands at 8.4 years, with rent escalation of 15% every three years. This translates to an average annual increase of about 5%, providing predictable income growth in line with inflation.
In addition to its office portfolio, it owns four operational business hotels (totalling 1,096 keys) and two under-construction hotels (totalling 518 keys). The hospitality segment performed strongly in FY25, with occupancy improving by 7% year-on-year to 63%. It also operates a 100 megawatt solar park that supplies renewable energy to its tenants.
In FY25, Embassy Reit delivered robust leasing performance, surpassing its initial guidance by 22%. It leased 6.6 msf across 98 deals, against the initial target of 5.4 msf. GCCs accounted for about 61% (4.1 msf) of the annual leasing, led by financial services (34%) and technology (25%).
The company reported strong growth in FY25. Revenue rose 10% year-on-year to ₹4,039 crore, while net operating income (NOI) increased 10% to ₹3,283 crore. Total distribution grew 8% to ₹2,181 crore, and the company distributed ₹23 per unit, exceeding its distribution guidance by 1.1%. At the current market price of ₹433, this implies a yield of 5.3%. In addition, the Reit has delivered an 11.4% return over the past year.
Looking ahead, the management expects continued growth across key metrics. Distributions are expected to rise 10% to a range of ₹25.3 per unit in FY26. This will likely be supported by a 13% growth in NOI, along with portfolio occupancy improving to 94%. Over the longer term, growth in NOI will also be backed by lease renewals. Around 22% of the Reit’s leases are set to expire by FY29, offering a blended mark-to-market upside potential of nearly 10%.
Mindspace Business Parks Reit
Mindspace Reit is sponsored by the K. Raheja Group, one of India’s leading real estate developers. Since its listing in 2020, the company has delivered an annualized return of 13.3% (as of April 22, 2025). It holds a portfolio of high-quality office spaces in prime micro-markets across four key cities in India: Hyderabad, Mumbai, Pune, and Chennai.
The total leasable area stands at 37.1 msf, of which 30 msf is completed. Geographically, the portfolio is concentrated in Mumbai (14.4 msf), followed by Hyderabad (16.1 msf), Pune (5.5 msf), and Chennai (1.1 msf). Mindspace Madhapur (Hyderabad) is the largest asset with 13.7 msf of leasable area and represents 35.5% of the total market value. The Reit has an average lease tenure of 7.4 years, with committed occupancy at 93%.
The tenant base is well diversified across sectors. The technology sector contributes the most to gross contracted rent at 39.3%, followed by financial services (17.6%) and telecom and media at 10.6%. The top ten tenants account for 33% of the total gross contracted rent. Foreign companies contribute 73% of total rent, while Fortune 500 companies account for 35.4%.
The company reported strong growth in FY25. Revenue rose 9.6% year-on-year to ₹2,563 crore, while NOI increased 8.9% to ₹2,062 crore. Total distribution grew 15.5% to ₹1,312 crore, and the company distributed ₹21.9 per unit, 14.6% higher than last year. At the current market price of ₹464, this translates to a yield of 4.7%. In addition, its share price has given a 25.5% return over the past year.
Looking ahead, the management aims to increase committed occupancy to 95% by FY26 end. Higher occupancy will also drive steady rental growth. Lease expiries of 1.5 msf in FY26 and 1.4 msf (FY27) are also expected to translate into rental escalation. The company expects continued NOI growth, which should lead to increased distribution per unit.
Brookfield India Reit
Brookfield India Reit is backed by Brookfield, a global asset manager with one of the largest real estate portfolios in the world. It is India’s only 100% institutionally managed office Reit. The company operates an area of 24.5 million square feet (msf) with a gross asset value (GAV) of ₹38,000 crore. Its portfolio includes SEZ properties (16.4 msf) and non-SEZ properties (8.1 msf).
The assets are primarily concentrated in Gurugram (33%), Mumbai (28%), Noida (19%), Delhi (11%), Kolkata (8%), and Ludhiana (1%). The tenant base is high quality, with the technology sector contributing 25%, followed by BFSI at 20% and consulting at 12%. The top ten tenants account for 33% of gross contracted rentals.
Prime properties include Candor Tech (Gurugram), Downtown Powai (Mumbai), and Worldmark Delhi. The portfolio has a committed occupancy of 88% and a weighted average lease expiry (WALE) of seven years. The lease expiry profile is well staggered, with 37% of contracted rentals coming up for renewal through FY29.
The company reported strong financial performance in FY25. Revenue rose 34% year-on-year to ₹2,386 crore, while net operating income (NOI) increased 37% to ₹1,854 crore. The company distributed ₹19.3 per unit, 9% higher than last year. At the current price of ₹341, this translates to a yield of 5.6%. In addition, it has delivered a 17.4% return over the past year.
Looking ahead, Brookfield India expects continued growth driven by both organic and inorganic expansion. Stable leasing momentum is projected to support around 14% growth in NOI and 21% growth in distribution in FY26. On the inorganic side, the company recently completed the acquisition of 3.3 msf of high-quality assets from the North Commercial portfolio.
This acquisition includes Grade-A assets in the Delhi-NCR region, such as Worldmark Delhi, Worldmark Gurugram, and Airtel Center. Additionally, the Reit is evaluating a potential acquisition of a large commercial portfolio in Bengaluru to expand further and diversify its business. For this purpose, it has raised ₹4,728 crore from marquee investors through a mix of preferential allotment and qualified institutional placement (QIP).
Bottomline
The reclassification of Reits as equity opens the door for greater mutual fund participation and improved liquidity, making them a more accessible way to invest in commercial real estate. Embassy, Mindspace, and Brookfield India offer well-managed portfolios with stable occupancy, predictable cash flows, and growth potential. As leasing activity strengthens, these Reits provide a steady income opportunity within a growing and more liquid market.
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Madhvendra has over seven years of experience in equity markets and writes detailed research articles on listed Indian companies, sectoral trends, and macroeconomic developments. The writer does not hold the stocks discussed in this article.
The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
