Brookfield India REIT Net Property Income Jumped 44% in Q3

Brookfield India Real Estate Trust (BIRET) registered adjusted net operating income of INR 3.5 billion ($41.6 million) in the third quarter, a 44 percent surge from a year earlier, thanks to increased offshoring from international companies and an expanded portfolio following recent acquisitions.

Having completed its purchase of $1.4 billion of commercial assets in a partnership with GIC last August, the trust on Monday reported a leap in leasing activity with 521,000 square feet of office space rented across its portfolio in the July to September period, including pre-leases, which was a 75 percent rise from the previous quarter.

Alok Aggarwal, chief executive officer of BIRET, attributed the improved performance to the trust’s recent acquisitions that allow the REIT to capitalise on growing demand for Indian offices from multinational firms.

“These transactions have increased our operating area by 45 percent, strengthened our presence in Mumbai and Gurugram and substantially diversified our tenant roster,” said Aggarwal. “India is already the ‘office to the world’ and is emerging as the destination of choice for fostering global business operations and innovation.”

International Appeal

In the third quarter, new deals accounted for 89 percent of the trust’s total leasing of approximately 463,000 square feet.

Having acquired the Downtown Powai complex in Mumbai and Candor TechSpace G1 in Gurugram from its sponsor in a deal signed in May, Brookfield Asset Management, expanded the trust’s gross asset value from $2 billion at the end of last year to $3.4 billion in September, and paved the way for more tenants.

Downtown Powai consists of nine buildings spanning  2.7 million square feet, while Candor TechSpace G1 comprises 12 properties measuring 3.7 million square feet. Both assets are undergoing asset upgrades.

The trust saw revenue from its operating leases rise to $33 million, up $8.2 million or 33 percent from the same period last year. The increase was concentrated in the trust’s latest portfolio additions which generated $8.7 million in revenue during the period.

With a portfolio of office parks across India’s major commercial hubs,  including Mumbai and Noida, the trust benefitted from an influx of multinational activity in Asia’s third-largest economy. With Brookfield REIT signing leases during the quarter with companies including US mobile technology producer Qualcomm and British bank Barclays.

The continued expansion of India’s technology industry has been boosting demand for business park space as large companies leverage its affordable labour costs. Gauri Nagabhushanam, chief executive officer of India Business Parks at Capitaland Investment, said on Mingtiandi TV in October that around one million people have joined India tech workforce since 2021, creating demand for 100 million square feet of quality office space.

Despite struggles in office markets in the US and Europe, leasing of deskspace in India grew to 17.4 million square feet in the July to September period, up by 10.9 percent from the second quarter, according to a report from Cushman & Wakefield. Fresh demand constituted around 69 percent of the leasing activity in the three-month period, up by 3 percentage points from the previous quarter.

Harvest Season for Indian Office REITs

Units in Brookfield India Real Estate Trust closed the day on Wednesday at INR 245.22, up 1.3 percent from the start of trading on the day of the announcement. The REIT’s results are part of a wave of favourable earnings reports for commercial landlords in the country.

In the same July through September period, Blackstone-backed Embassy REIT also had its strongest quarter ever for leasing as the India office park trust signed deals with tenants for 2 million square feet, with almost three quarters of that space let to international firms.

“Global companies continue to flock to India on the back of our skilled Indian talent available at scale,” said Aravind Maiya, chief executive officer at Embassy REIT, in an earnings call announcing the results. “This clearly indicates that global corporations are getting increasingly confident of their business and headcount growth in India and hence accelerating.”