RBI Proposal May Unlock Rs 26,000 Cr Refinancing Boost For Office REITs

Jun 13, 2026

Bank lending framework could create up to Rs 80,000 crore in fresh funding capacity as India's office REIT market expands into a Rs 2.4 lakh crore asset class, says ICRA

The ratings agency estimates that the proposed framework could unlock refinancing opportunities worth nearly Rs 26,000 crore for office REITs over the medium term, corresponding to outstanding non-convertible debenture (NCD) maturities due from FY2027 onwards. At a gross loan-to-value (LTV) ratio of 40 per cent, the proposal could also create an additional funding opportunity of Rs 75,000-80,000 crore for acquisitions and portfolio expansion.

Office REIT Market Grows into Rs 2.4 Lakh Crore Asset Class

The proposed regulatory change comes at a time when India's office REIT market has evolved into a Rs 2.4 lakh crore asset class. According to ICRA, REIT-owned assets now account for 16 per cent of the Grade A office stock across India's seven major office markets—Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai Metropolitan Region (MMR) and Pune—up from around 10 per cent a year ago.

The sector received a further boost with the listing of Bagmane REIT in May 2026. The newly listed REIT, with a gross asset value (GAV) of approximately Rs 40,000 crore, has expanded the scale and depth of India's office REIT ecosystem.

ICRA noted that office REIT portfolios have expanded nearly eight-fold over the past six years, reflecting growing institutional investor interest in income-generating commercial real estate assets.

Strong Balance Sheets Support Future Growth

The report highlighted that listed office REITs remain conservatively leveraged despite rapid growth. Their consolidated gross LTV stood at around 24 per cent as of March 2026, significantly below the proposed regulatory ceiling of 49 per cent.

This provides substantial headroom for future borrowing and acquisitions if the RBI's proposed framework is implemented.

According to ICRA, the combination of low leverage levels, stable cash flows and strong occupancy rates places office REITs in a favourable position to drive the next phase of growth in India's commercial real estate market.

Leasing Activity Remains Resilient

Despite global macroeconomic uncertainties and concerns around economic growth in several key markets, India's office sector continued to demonstrate resilience during FY2026.

Occupancy levels remained above 80 per cent across major office markets, while Bengaluru and the Mumbai Metropolitan Region reported occupancy levels exceeding 90 per cent. The strong occupancy performance underscores sustained demand from occupiers, particularly in premium Grade A office assets.

The healthy leasing environment has helped maintain robust rental cash flows for office REITs, supporting investor confidence and enhancing their ability to pursue growth opportunities.

RBI Framework Could Accelerate Sector Consolidation

ICRA believes that access to bank financing could materially improve the funding profile of office REITs by diversifying their borrowing sources beyond capital markets. The refinancing of existing debt and access to lower-cost bank funding could strengthen balance sheets while supporting acquisitions of high-quality office assets.

With REIT-owned office stock continuing to expand and occupancy levels remaining strong, the proposed RBI framework is expected to further institutionalise India's commercial real estate sector and support the next phase of consolidation and growth.

Industry observers believe the move could make office REITs more competitive in acquiring large commercial assets while improving financial flexibility at a time when India's office market continues to attract domestic and global investor interest.

Source:https://www.businessworld.in/article/rbi-proposal-may-unlock-rs-26-000-cr-refinancing-boost-for-office-reits-610563