India’s Mindspace REIT Buying Chennai Business Park From CapitaLand in $321M Deal

Just two weeks after buying its second property in Chennai, Mindspace Business Parks REIT is adding a third asset in the southern India tech hub, according to an announcement on Tuesday by the trust’s manager.

The trust sponsored by developer K Raheja Corp has teamed up with a fund managed by Mumbai investment firm 360 One Asset to sign an agreement to buy International Tech Park Chennai, Radial Road from a fund managed by CapitaLand Investment for INR 30 billion ($321 million) under a co-investment structure, per Mindspace REIT’s announcement. 

Mindspace REIT is acquiring a 51 percent stake in the two-building campus while 360 One Real Assets Advantage Fund and its affiliates are acquiring the remaining 49 percent of the property on Chennai’s 200 Feet Radial Road. The deal, which is subject to unit-holder approval, will boost Mindspace REIT’s Chennai presence to the equivalent of 6.3 million square feet, which is equivalent to 14 percent of its overall portfolio, from just 3 percent before these two most recent acquisitions. 

“The acquisition of this institutional-quality, low-carbon campus in a high-growth corridor, anchored by blue-chip tenants and long leases, with clear income visibility makes it a strong strategic fit,” Mindspace REIT managing director and chief executive Ramesh Nair said. “Building on our recent acquisition of Commerzone Pallikaranai, this asset acquired from a fund under CapitaLand Investment, a leading global real asset manager, positions us as one of the largest owners of commercial office assets in Chennai.”

Top Tenants

With International Tech Park Chennai, Radial Road spanning 2.57 million square feet (238,761 square metres) of lettable area, Mindspace REIT and its partner are paying the equivalent of INR 11,673 per square foot for the property, according to Mingtiandi calculations.

The property is expected to generate INR 2.4 billion per year in net operating income when fully stabilised, with the purchase price representing a 2 percent discount from an independent valuation of the property at INR 30.61 billion, according to Mindspace REIT. 

Mindspace REIT indicated a 7.7 percent cap rate on the acquisition, based on its projections of net operating income when stabilised. The property was pre-certified as IGBC Platinum under the Green Building Council’s regime for sustainable buildings and was acknowledged as a Net Zero project by the same body. The tech park was also pre-certified under the WELL standard for healthy workplaces. 

With the first tower in the project having been completed in 2023, that facility now has committed occupancy of around 87 percent, while the second tower, which was opened in September last year, has now received commitments for 28 percent of its space. 

The complex occupies a 12.99 acre (5.3 hectare) site on Pallavaram-Thoraipakkam Road, also known as 200 Feet Radial Road, which is known as the home of Chennai One Software Park and links some of the city’s fastest growing commercial areas with its East Coast Road thoroughfare. 

While Mindspace REIT did not name tenants in its statement, CapitaLand had earlier identified Walmart and Danish wind power company Vestas as tenants, with US financial services provider State Street also known to have a presence in the complex. Walmart is estimated to occupy 32 percent of the leased area in the property, with Vestas having another 24 percent and State Street leasing 14 percent. 

Chennai Expansion

In its statement, Mindspace REIT pointed to the acquisition making it a leading player in Chennai, and in the area of the city’s Pallavaram-Thoraipakkam Road (PTR) as 200 Feet Radial Road is also known. 

“Chennai is one of India’s most resilient office markets, and with PTR established as a major corridor where demand continues to outpace supply, this acquisition positions us strongly to capture rental upside,” Mindspace REIT’s Nair said at the time that the REIT announced its Commerzone Pallikaranai acquisition last month. 

With its two most recent Chennai acquisitions each measuring around 2.6 million square feet, the REIT’s manager said it will own the largest portfolio in the fast growing location, and said it will position the trust among the two largest office landlords in Chennai. 

Net operating income from the two Chennai acquisitions is expected to reach INR 5.1 billion annually when they are stabilised, with Mindspace REIT having earned net operating income of INR 5.4 billion in the 12 months which ended 31 March 2025. 

Monetising Pipeline

For CapitaLand India, the disposal allows the company to monetise a project which was first undertaken by Ascendas-Singbridge in January 2019, before that company was merged into CapitaLand Group later that year. 

In 2020, CapitaLand said it would invest INR 10.5 billion to develop the first phase of International Tech Park Chennai, Radial Road, before selling a 70 percent stake in the project to its CapitaLand India Growth Fund 2 vehicle in a deal announced in August 2023. 

Mitsubishi Estate was announced as a cornerstone investor in CapitaLand India Growth Fund 2 in September 2023, with Daibiru Corporation, a real estate investment unit of Japan’s Mitsui OSK Lines, committing to the vehicle just over a year later. 

“The divestment of International Tech Park Chennai, Radial Road will exceed the fund’s targets, reflecting CLI’s over 30 years of investment and operating experience in India, Hardik Gesota, managing director for private funds with CapitaLand Investment’s India team said in a statement. “The divestment is a testament to the effective development and fund management strategy of CapitaLand India Growth Fund 2 in achieving optimal outcomes for its institutional investors.”