Mindspace Business Parks REIT (BSE: 543217 | NSE: MINDSPACE), a leading developer and owner of Grade A office properties, has announced the issuance of its INR 650 Crore (6.5 billion) Sustainability Linked Bond, which has been fully subscribed by the International Finance Corporation (IFC), the private sector arm of the World Bank Group. The bond’s coupon rate is tied to Mindspace’s achievement of specific Environmental, Social, and Governance (ESG) targets aimed at fostering a greener ecosystem.
Issue Details
The bonds, rated [ICRA] AAA(Stable) by ICRA Ltd., have a tenure of seven years. Shardul Amarchand Mangaldas & Co served as the legal counsel for the issuance.
ESG Targets
Mindspace REIT has committed to several ESG targets essential to its operations, including the reduction of greenhouse gas (GHG) emissions (Scope 1, 2, and 3), increasing the share of green-certified areas in existing buildings, and reducing energy intensity. The bond’s coupon rate is fixed but will decrease incrementally as the company meets these targets.
Sustainability Linked Financing Framework
This bond issuance marks the introduction of Mindspace REIT’s sustainability-linked financing framework, allowing the REIT and its SPVs to issue sustainability-linked instruments. The framework is structured around five key components: Selection of Key Performance Indicators (KPIs), Calibration of Sustainability Performance Targets, Characteristics of Sustainability-Linked Instruments, Reporting, and Verification.
Second Party Opinion
Bureau Veritas, a leader in sustainability services, provided a second-party opinion on the framework, confirming its alignment with the Sustainability Linked Bond Principles (SLBPs) and Sustainability Linked Loan Principles (SLLP). Bureau Veritas also concluded that the Sustainability Performance Targets are ambitious and meaningful, reflecting a substantial improvement over a predefined timeline.
Commenting on this, Ramesh Nair, CEO of Mindspace Business Parks REIT, expressed enthusiasm about the new milestone, stating, “We are thrilled to announce another significant milestone in our sustainability journey as we become the first Indian REIT to issue sustainability-linked bonds. International Finance Corporation fully subscribed to this issuance. This follows our maiden green bond issue in March 2023. Post this issuance our cumulative green/sustainability linked financing now stands at INR 18.6 billion, 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.”
Wendy Werner, IFC Country Head for India, highlighted the strategic partnership with Mindspace REIT, stating, “We are pleased to partner with Mindspace REIT for its maiden sustainability-linked bond. 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.”
This issuance represents a significant step towards integrating sustainability into financial instruments and showcases Mindspace REIT’s commitment to achieving long-term environmental and social goals.
