| Horizonview Properties Private Limited | ||||
| Rating reaffirmed at 'CRISIL AAA (CE) / Stable' | ||||
| Rating Action | ||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL AAA (CE)/Stable’ rating on the long-term bank facility of Horizonview Properties Private Limited (Horizonview; part of Mindspace Business Parks REIT [Mindspace REIT; rated ‘CRISIL PPMLD AAA/CRISIL AAA/Stable/CRISIL A1+’])
The rating centrally factors in the unconditional and irrevocable corporate guarantee by Mindspace REIT. The guarantee along with the promoter undertaking cover the principal, interest, and other monies payable on the rated facility of Horizonview. Any adverse movement in the credit risk profile of the guarantor and non-adherence to the payment mechanism are key rating sensitivity factors.
Mindspace REIT is sponsored by the K Raheja Corp group. The REIT owns eight special purpose vehicles (asset SPVs) comprising 10 commercial offices, information technology (IT) parks and special economic zone (SEZ) assets and houses the facility management division.
The ratings continue to reflect Mindspace REIT's comfortable 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, amidst benefits of healthy occupancy and geographic diversification. The strengths are partially offset by susceptibility to volatility in the real estate sector, causing fluctuations in rental rates and occupancy levels. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of Mindspace REIT and its asset SPVs, in-line with its criteria for rating entities in homogeneous groups. Hence, the rating of Horizonview is based on that of the REIT. This is because Mindspace REIT has direct control over the asset SPVs and will support them in the event of any exigency. Additionally, as per Securities and Exchange Board of India’s (SEBI’s) REIT Regulations, 2014, Mindspace REIT and its asset SPVs are mandated to distribute 90% of their net distributable cash flow. Also, the cap on borrowing by the REIT has been defined at a consolidated level (equivalent to 49% of the aggregate value of Mindspace REIT’s assets).
CRISIL Ratings has also applied its criteria for rating instruments backed by guarantees, and the ‘CE’ suffix indicates that the credit quality has been enhanced because of the guarantee.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:
The proceeds from NCDs of Rs 75 crore & Rs 200 crore were utilised primarily for refinancing external debt at underlying asset SPVs. These instruments are non-amortising with bullet repayment at the end of 36-38 months from deemed date of allotment, while the coupon is payable quarterly.
The MLDs of Rs 375 crore were also utilised primarily for refinancing external debt at underlying asset SPVs. These instruments are similar to the NCDs in terms of amortisation and have a tenure of 1156 days from the date of allotment. The coupon is accruing and to be paid at the time of redemption of MLDs, subject to terms of and conditions mentioned in the transaction documents.
The proceeds from NCDs of Rs 400 crores raised under Sundew Properties Ltd (Sundew; rated CRISIL AAA/Stable) were also utilised primarily for refinancing external debt at underlying asset SPVs. These instruments are non-amortising with bullet repayment at the end of 33 months from deemed date of allotment, while the coupon is payable quarterly. . The NCDs of Rs 500 crore raised in February 2022 have been primarily utilised for refinancing of external debt at underlying SPVs. These are non-amortising with bullet repayment at the end of 3 years, while the coupon will be payable quarterly.
The NCDs of Rs 500 crore raised in July 2022 were utilised primarily for refinancing of existing debt at underlying SPVs. These are non-amortising with bullet repayment at the end of 5 years, while the coupon will be payable quarterly.
The NCDs of Rs 550 crore are expected to be utilised towards refinancing existing loans undertaken towards eligible green projects and for providing loans to the SPVs of the REIT (directly or indirectly) for repayment of their existing loans for eligible green projects in accordance with applicable laws.
Weakness: |
Liquidity: Superior Liquidity remains strong, supported by healthy debt protection metrics, including for permitted additional financing. Further, a low LTV ratio enhances the REIT’s financial flexibility. Consolidated debt is unlikely to cause LTV ratio to exceed 40%, thus protecting investors from any decline in property prices and the consequent impact on refinancing. |
Outlook: Stable CRISIL Ratings believes Mindspace REIT will continue to benefit from the quality of its underlying assets over the medium term. |
Rating Sensitivity factors Downward factors:
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Adequacy of credit enhancement structure Mindspace REIT has provided an unconditional and irrevocable guarantee for the rated instruments, thus ensuring timely payment of the interest and principal obligations. |
Unsupported ratings CRISIL AA CRISIL Ratings has introduced the 'CE' suffix for instruments having explicit credit enhancement feature in compliance with SEBI’s circular dated June 13, 2019. |
Key drivers for unsupported ratings The unsupported rating on the bank loan facility of Horizonview does not factor in credit enhancement arising from the corporate guarantee. The unsupported rating takes into account Horizonview’s cash flow contribution to, and the support it will receive from, Mindspace REIT on account of the REIT’s intent to operate the REIT assets as a homogenous group. |
About the Company Horizonview Properties Pvt. Ltd (Horizonview) owns an IT park, Commerzone, in Porur, Chennai. The property was completed in June 2020, having completed leasable area of approx. 9 lakh sq. ft. with committed occupancy of 93.5% as on December 31, 2022
About the Trust Mindspace REIT is registered as an irrevocable trust under the Indian Trust Act, 1882, and as a REIT with SEBI’s REIT Regulations, 2014, as amended. Mindspace REIT’s portfolio assets are held through the following asset SPVs:
K Raheja IT Park (Hyderabad) Ltd (KRIT), Sundew Properties Ltd and Intime Properties Ltd (Intime) own and operate a SEZ/IT park, Mindspace, in Madhapur, Hyderabad. The property has been operational since 2005 and has a total completed area of approximately (approx.) 99 lakh sq. ft with committed occupancy 94.5% as on December 31, 2022, while an additional area of approx. 19 lakh sq. ft is expected to be developed over the medium term.
Avacado Properties and Trading (India) Pvt. Ltd (Avacado) owns and operates: a) An IT park, Mindspace, in Malad, Mumbai region. The property has been operational since 2004, and has a total leasable area of approx. 7 lakh sq. ft with committed occupancy of 94.8% as on December 31, 2022 b) A commercial office, The Square, in Bandra Kurla Complex, Mumbai region, with a total leasable area of approx. 1 lakh sq. ft and committed occupancy of 100.0% as on December 31, 2022. The property is completely leased.
Mindspace Business Parks Pvt. Ltd (MBPPL) owns and operates: a) An SEZ, Mindspace, in Airoli (East), Mumbai region. The property has been operational since 2007, and has a total completed leasable area of approx. 47 lakh sq. ft with committed occupancy of 88.3% as on December 31, 2022, while an additional area of approx. 21 lakh sq. ft is expected to be gradually developed over the medium-to-long term. b) An IT park, Commerzone, in Yerwada, Pune. The property has been operational since 2010, and has a total leasable area of approx. 17 lakh sq. ft with committed occupancy of 98.4% as on December 31, 2022 c) An IT park/commercial office, The Square, in Nagar Road, Pune. The property has been operational since 2015, and has a total leasable area of approx. 7 lakh sq. ft with committed occupancy of 100.0% as on December 31, 2022, while an additional area of approx. 1 lakh sq. ft is expected to be gradually developed over the medium-to-long term d) An SEZ, Mindspace, in Pocharam, Hyderabad. The property has been operational since 2012 and has a total completed leasable area of approx. 6 lakh sq. ft with committed occupancy of 37.5% as on December 31, 2022, while an additional area of approx. 4 lakh sq. ft is expected to be gradually developed over the medium-to-long term
Gigaplex Estate Pvt. Ltd (Gigaplex) owns and operates an SEZ/IT park, Mindspace, in Airoli (West) (Mumbai region). The property has been operational since 2013, and has a total completed leasable area of approx. 47 lakh sq. ft with committed occupancy of 69.6% as on December 31, 2022, while an additional area of approx. 6 lakh sq. ft is under construction and expected to be completed in phases over the next two fiscals.
a) Owns and operates an SEZ/IT park, Commerzone, in Kharadi, Pune. The property was completed in fiscal 2020, and has completed leasable area of approx. 16 lakh sq. ft with committed occupancy of 100.0% as on December 31, 2022. Another approx. 14 lakh sq. ft of area is under development or proposed to be developed over the medium term. b) The facility management arm, housed under this entity beginning October 1, 2020, provides services for each asset under the REIT. Services include housekeeping, management of equipment, facade cleaning, security expenses, repair and maintenance and maintenance of common areas, etc.
For the 9 months ended December 31, 2022, profit after tax (PAT) was Rs 342 crore on a consolidated revenue of Rs 1,533 crore against PAT of Rs 314 crore and consolidated revenue of Rs 1,288 crore over the corresponding period of the previous fiscal. |
Key Financial Indicators
**Fiscal 2021 financials are not comparable with that of fiscal 2022 and pertain the 8-month period since August 1, 2020 post listing of REIT. |
Any other information: Not applicable Key financial covenants (REIT Level)
For MLDs tranche II of Rs 375 crore, and NCDs tranche I, II and III of Rs 200 crore, Rs 75 crore and Rs 500 crore, respectively
For recent NCDs of Rs 550 crore
Key financial covenants (SPV Level)
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Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
*Includes sublimit for overdraft facility of Rs 50 crore, foreign currency term loan of Rs 150 crore, letter of credit of Rs 10 crore and bank guarantee of Rs 15 crore |
Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||
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Criteria Details
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