World Bank member IFC invests Rs 650 cr in Mindspace REIT’s sustainability-linked bonds

This is a maiden sustainability-linked fundraising by any listed Real Estate Investment Trusts (REITs) in India. This follows the REIT’s issuance of Green-bonds last year.

Green bond loans are funds raised to finance construction of environment-friendly properties, while sustainability bonds are linked to achievement of sustainability targets.

“IFC’s investment will help Mindspace enhance the sustainability of its portfolio of business parks and reduce greenhouse gas emissions year-on-year. This partnership aligns with India’s net-zero ambitions and demonstrates the viability of climate finance in the real estate sector. Our support aims to attract more diverse and long-term funding at a time when private capital is critical to build a greener, more resilient future,” said Wendy Werner, IFC Country Head for India.

The coupon of this sustainability-linked bond is connected to Mindspace Business Park REIT’s commitment to achieve certain ESG targets towards building a greener eco-system. The proceeds of this fund raising are proposed to be utilised for refinancing amongst other uses.“This follows our maiden green bond issue in March 2023. Post this issuance our cumulative green/sustainability linked financing now stands at Rs 1,860 crore, strengthening our commitment to responsible growth. Our purpose to ‘build sustainable ecosystems’ helps us create long-term value for stakeholders, blending financial success with the environmental and social benefits,” said Ramesh Nair, CEO, Mindspace Business Parks REIT.Mindspace REIT has undertaken certain ESG targets critical to its operations. These include reduction in greenhouse gas emissions, increasing the share of green certified area for existing buildings under operations and maintenance, and reduction in energy intensity. The coupon of these bonds is fixed in nature, and will be stepped down, in a staggered manner, basis achievement of the set targets.The tenure of these bonds is seven years with final redemption date of June 24, 2031, at a coupon of 7.94% per annum, payable quarterly. IFC has subscribed to 65,000 listed, rated, secured, redeemable, transferable, taxable, non-cumulative non-convertible debentures of Rs 1 lakh each aggregating to Rs 650 crore on a private placement basis. These bonds are proposed to be listed on the Wholesale Debt Market (WDM) segment of the Bombay Stock Exchange.

Mindspace REIT has put into place its maiden sustainability-linked financing framework under which Mindspace REIT and/or its SPVs can undertake issuances of sustainability linked instruments. The framework is based on five key components including selection of key performance indicators, calibration of sustainability performance targets, sustainability-linked instrument characteristics, reporting, and verification.