Ladies and gentlemen, good day, and welcome to Brookfield India Real Estate Trust earnings call for Q3 FY23. As a reminder, all participant lines will be in the listen only mode until the floor is open for questions. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. On the call, we have the following persons: Mr. Ankur Gupta, Managing Partner, Brookfield Asset Management and Director, Brookprop Management Services Private Limited. Mr. Alok Aggarwal, Chief Executive Officer, Brookprop Management Services Private Limited. Mr. Sanjeev Kumar Sharma, Chief Financial Officer, Brookprop Management Services Private Limited, and Mr. Shailendra Sabhnani from Brookfield. I now hand the conference over to the management. Thank you, and over to you, sir. Thank you. Good afternoon, everyone, and welcome to the third quarter FY23 earnings call for Brookfield India REIT. We continue to deliver robust performance, with around 1 million sq ft of leasing year to date, with around 2/3 being contributed from new leasing and the balance of renewals. We have also achieved 10% average escalation on 3.5 million sq ft of leased area to date. Our occupancy has remained stable while achieving a 9% NOI run rate growth over FY22. Our NOI run rate as of December 2022 stood at INR 961 crore. As of further embedded growth potential of 18%, through a mix of re-leasing, de-leasing and MTM potential that is well supported by a robust 2.2 million sq ft leasing pipeline. We also continue to evaluate select sponsor assets, which will further grow the REIT portfolio organically. The balance sheet continues to remain robust with a 32% LTV subsidiary rating, which has enabled us to achieve highly competitive pricing. On the recent budgetary announcements, we are putting together a representation along with industry participants, which my colleague Sanjeev will further elaborate. I will hand over to Alok for a deep dive into the business updates. Thank you. Thank you, Shailendra. A very good afternoon to everyone. I'm pleased to announce that we have delivered another quarter of stable performance for our unit holders. We have seen a consistent improvement in the physical occupancy at our assets. In the quarter ending December, comprising the holiday season in many organizations, our assets have continued to witness physical occupancies at over 50%. This increase in physical occupancy is driving increased leasing inquiries. We continue to attract new tenants to our world-class portfolio, and many of our existing high-quality tenants are looking to expand their footprint in our portfolio assets. Our leasing remains on track, and we have a healthy leasing pipeline. During the last quarter, we leased 332,000 square feet, comprising 241,000 square feet of new leasing and 91,000 square feet of renewals. Additionally, we signed expansion options of about 40,000 sq ft. The total leased area of the portfolio has remained stable at 11.9 million sq ft, and we have maintained our committed occupancy at 83% and effective economic occupancy at 88%. Our existing leases have delivered a robust embedded growth with a 12% average escalation on 1.5 million sq ft during the quarter. In the last nine months, we have achieved gross leasing of INR 949,000 sq ft with a healthy mix of existing and new tenants taking up space. Additionally, we have signed expansion options of INR 170,000 sq ft and have a robust leasing pipeline with 2.2 million sq ft of ongoing discussions. This should provide a further fillip to our leasing re-recovery. We have added many new office tenants into our portfolio in the year to date, including Aristocrat Technologies, LTIMindtree and Macromill. Backed by robust cash flows from our underlying assets, the board has approved a distribution of INR 5 per unit this quarter. We remain on track to achieve our H2 FY23 NDCF guidance. It has been one year since we completed the acquisition of Candor TechSpace N2. We are pleased with the leasing success we have achieved in this asset, with the last new lease signed at a rental 15% higher than the income support rental of INR 60 per sq ft. The newly completed tower at the asset, tower 11A, has seen 77% leased to Aristocrat, a leading mobile game developer. The balance 23% is available with them as an expansion option, making the tower fully committed within seven months of completion. ESG continues to be a key component of our overall strategy, and we continue to work towards a sustainable future with our target to achieve net zero by 2040. At close, we have received just a 5-star rating and the prestigious Golden Peacock Award both are say that we are making meaningful progress and motivates us to increase our efforts to create sustainable campuses. We remain closely connected with the communities that we operate in. We recently launched a Trees of Hope campaign with the objective of providing education to children, which has seen a fantastic response from all our stakeholders. The REIT has an attractive acquisition pipeline and is evaluating 6.5 million sq ft across two assets, Candor TechSpace G1 in Gurugram and Downtown Powai in Mumbai. These acquisitions, if materialized, would help broaden the REIT and diversify our offering to our tenants. Backed by our high-quality portfolio, we continue to remain focused on the path of education for our unit holders, we continue our efforts to deliver long-term value to our partners and communities. I would like to invite Sanjeev to provide the financial updates. Thank you. Thank you, Alok. Good evening, everyone. I'm pleased to announce that we have achieved an NDCF of INR 168 crore, means INR 5.01 per unit in Q3 of FY2023. Are on the track to achieve our full year guidance of INR 20.25 per unit. For the nine months of FY23, we have already achieved an NDPS of INR 15.26 per unit. The board has approved the distribution of INR 168 crore or INR 5 per unit this quarter. With this, we have distributed INR 509 crore or INR 15.20 per unit for the nine months of FY2023. There were recent budgetary announcements regarding taxation of the component of distribution that accounts for around 50% of our current distributions. It is pertinent to note that apart from distributions, REITs provide capital appreciation driven by embedded growth drivers in the underlying assets, and the taxation on capital gains of REIT remains unchanged. We are examining the impact of the budget announcement and, along with industry participants, are evaluating next steps, including making appropriate representations. Our operating lease rentals for the quarter are INR 207 crore, which is 43% higher than the same period last year. The adjusted NOI for the quarter, including income support from the sponsor group, is INR 240 crore, which is 60% higher than quarter three FY2022. For the nine months of financial year 2023, we achieved a 33% growth in our operating new rentals at INR 616 crore, and a 48% growth in our adjusted NOI at INR 716 crore, which is primarily driven by the addition of Candor TechSpace N2 to the portfolio and a significant improvement in our CAM margins over financial year 2022. The improvement in our CAM margins was driven primarily by some of occupiers moving to the higher hours of operation and because of the higher physical attendance we have seen at our assets. We continue to maintain a strong balance sheet with a 32% loan-to-value, and robust cash flow generated by our high-quality assets have ensured that our debt is rated AAA stable by Crisil. This has enabled us to see a limited increase in the average interest rate to 7.95% as on 31st December 2022, which is 119 basis point increase in the interest rate during nine months of financial year 2023, as compared to a 225 basis point increase in the repo rate during the same period. With the highest credit quality and minimal refinancing risk, we have witnessed only a partial pass-through of an increase in benchmark rates to our borrowing costs. Thanks, everyone. With this, I would request the moderator to open the floor for Q&A. Thank you very much, sir. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may enter star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Anyone who has a question may enter star and one. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Puneet Gulati from HSBC. Please go ahead. Yeah, thank you so much for the opportunity. My first question is, you know, obviously with respect to the tax. You know, based on your assessment, what is the implication if the budget proposals go through? Secondly, what is the industry and you trying to do about it? Related to that, how does it impact the ROFO proposition? Let me just answer. One is, you know, this is not taxation that we're talking about as applicable uniformly for everybody. Let us make that distinction. Yeah. To say that this is not gonna be a holistic answer. Okay. Second, you know, we've heard, you know, a lot of commentary around. You know, that this was, you know, principal repayment to the REIT, et cetera, is, you know, almost relates to not paying taxes. Debt repayments, the way we've all learned, happens from post-tax income as applicable. Mm-hmm. I think there is a little bit of commentary that's required and there's, you know, confusion that needs to be plugged in. As Sanjeev mentioned, we are making representations... Sure. to make sure that the point is well established. Just like dividends are paid from post-tax income, debt repayment on the principal side also happens from net operating profit after tax, right? Yes. Yes. Finally, the capital-based nature of suitable capital adjustments, as it relates to principal payments are already in the code right now. On all three counts, I would say that this needs a clarification and we have, as Sanjeev said, made representations or are gonna make representations because it impacts... Clarity is required. Yeah. Sorry, Puneet, another question that you had. Yeah, no. What does it do to the ROFO proposition, right? In case there is no change in the budget proposal and it does get passed through, how does it impact the ROFO proposition then? These are long-term assets. You know, this is a product which has dividends. It has a product that has capital appreciation, et cetera. I don't think fundamentally, you know, things change. Of course, it's not great if tax codes either are tinkered with too frequently. Mm-hmm. for the confusion that gets created, which I don't think is gonna be the case. You know, India has a very robust REIT environment. We've learned our regulations from the best places in the world. I think clarification will come through is my understanding, or at least my hope. You know, to grow the REIT through acquisitions remains our strategy. So just related to that, if I may, Ankur, interject on the news article which related that, you know, Brookfield Powai portfolio might get, you know, sold to GIC. Is that something that you would even evaluate or should we think that everything that Brookfield own will ultimately flow into the REIT? I don't think it's fair for me to comment upon a media article here. You know, even in the presentation we put out and in the speaking notes that Alok just, you know, mentioned, Downtown Powai is being considered as part of the ROFO portfolio. Understood. That's helpful. My other two questions are just a bit on financial side. There was a positive in tax impact of almost INR 309 million for this quarter. Are we likely to see more of this in the remaining year or all those re-refunds are done with now? Puneet, Sanjeev here. As you know how our tax regime works, the withholding tax gets deducted every quarter and then in some quarters refunds comes. Over a period of time it's tax neutral I will say because some, in some quarters you will see negative where withholding tax is deducted and some quarters you will see refunds. It's a continuing process which will happen till perpetuity. For this year, is there more to come or are we done with fiscal 2023? There are certain refunds in the balance sheet outstanding. We can't exactly comment on the timing whether we will be able to get those refunds in the current quarter because we are only one quarter away from the year-end or in the coming quarters. Okay. Understood. Can you also clarify how much of your unoccupied portfolio is ACV now? Sorry, the question? How much of the unoccupied portfolio is ACV? As square footage, I would say most of our vacancy right now is in the ACV portfolio. Okay. Understood. Last if I may squeeze in. There are some big expiries due in FY 2024, especially from Tech Mahindra. Any update or color you want to give there? Puneet, this is Alok. I think we have mentioned in the past that discussions have progressed well and it's just a question of time. You know, we should be able to get confirmation from tenant for further, you know, delivery and confirmation. We are advanced stage of discussions. Very advanced stage. Understood. That's helpful. Thank you so much. All the best to you. Thank you. Thank you. A reminder to our participants, if you wish to ask a question you may press star and one. The next question is from the line of Kunal from Bank of America. Please go ahead. Great. Thank you. I just wanted to follow up on, you know, the developments that came through as part of the budget. Ankur, on the repayment of debt, is there representation about trying to get it reversed or see what workarounds might be possible? You know, if you could clarify that one. I, you know, the industry is making a joint representation. It's not probably fair for me to make my assessment. As I said that there are clarifications rather than reversals that are required right now. Because as I said, one is there was, again, there's a lot of chatter around that, you know, this was a channel, which was the kind of, you know, I would say, quote, unquote, "loophole around taxation." That's not the case, right? That's the clarification required. Yeah. The existing course provide for dealing with such repayments of debt leading to distribution. I would say it's a matter of the tax code of the country to be interpreted properly and clarification required from the announcement made during the budget. We have to, you know, wait and see how this plays out. Right. Okay. Then, you know, on the FCD part of it or the base bill, Mindspace was of the view that, you know, Again, the industry would sort of talk about trying to make adjustments to the existing policy itself. Do you have any thoughts there as to, you know, how fast could we see progress on this particular front, et cetera? Kunal, this is Alok. You know, we had multiple discussions with the maintenance regulatory body. I think there's sufficient progress has been made here, and that's the indication we have. Difficult to commit timelines, there's sufficient progress has been made. At the same time, you know, what we also if, and you've seen the results as to what has been done. We are repitching all our properties and we see sufficient attractiveness for FCD properties also. Both angles, sufficient progress with government. Difficult to commit timelines. I think two months more. At the same time, you know, we are seeing interest also there for FCD and we continue to work with tenants for leasing of FCD properties also. Yeah. Okay. The last one from me. you know, your average rentals at INR 64, it basically feels unchanged over a span of eight quarters. I was wondering as to why should that be, because you've been getting the escalations. Is that mainly because of any sort of a mix change maybe caused by N2 or anything else going on there? This is one reason. We can look at the details, but of course we have seen a lot of leasing in N1. Of course, leasing in N1 we have kind of now gone from almost INR 50-52 now INR 60, INR 62. That is one reason where, you know, when the leasing entry is lower. Okay. This should all be mix led, is your guess, correct? Absolutely. Absolutely. Okay. All right. Thank you. Thank you. We'll take our next question from the line of Sri Karthik Velamakanni from Investec. Please go ahead. Yeah. Hi. Thanks team. Just a quick clarification on this taxations in the budget. In the current form, will there be any benefit to the cost basis on the capital gains? Sorry, Sri Karthik, if you could just clarify your question and, I mean, we tried to clarify from our position on the. Yeah. On the tax. We, as you would appreciate that. We all have the same information. If you could just clarify your question, then we'll try to see what best we can do. Yeah. Instead if the principal repayments instead of being classified as principal repayments, they're classified as income. Earlier the cost basis would have been lowered because of this. Now, the capital gains component at least would be adjusted up upwards, right? There'll be lower capital gains and thus lower capital gains tax. Is that the right understanding? I mean, that's when we stated that, you know, there is existing law or tax framework to deal with the entire picture. You're right. Mm-hmm. That both can't co-exist. We won't be in a position to answer what part of it is the right answer, because there is a little bit of confusion there, and that's the clarification that the industry has sought. A repayment, in our opinion, is not repayment is repayment. Yeah. We can't classify it as, you know, BB impact, right? Understood. Just to clarify this, effectively the outcomes are if they sort of roll this back then effectively your capital gains increase. If they do not, then you get a benefit there. Is that the right understanding? The first part is probably the right understanding as it relates to the treatment to date anyway. Yeah. Before the recent announcement came in. I don't see any changes on that front. Understood. Okay, this is very helpful. The second question is what percentage of our operating assets are classified as FCD? Could you also quantify if, so what percentage of that area is vacant currently? Yeah. This is Alok. Out of, you know, FCD we have, N1 is non-FCD. Other assets are FCD. As we have mentioned that 90% of vacant area is in FCD. Okay. Are you also looking to selectively denotify some of this, depending on obviously approvals there? Yeah. Subject to approvals, we can look at denotify. If it makes, you know, it's accretive for us, we can look at it. Mm-hmm. You know, right now you can denotify new buildings, but not the old or occupied buildings. That route is not there. Understood. Lastly, because you have, the way you have mentioned your NOI growth over a Q4 base, the way to interpret this is of course that, 9% absolute growth so far is effectively annualizing to 12%-13% on a full year basis. Is that the right interpretation out here? I don't think that's the right interpretation. It's comparing studies or, you know, run rate to run rate. The right interpretation is if you extend that to 18% potential, this portfolio has a stabilized potential of more than INR 1,100 crore of income per year. Okay. I got it. Understood. All right, that is all for me. I will come back in the line. Thank you. Thank you. Thank you. As there are no further questions from the participants, I would now like to hand the conference back to Mr. Ankur Gupta for closing comments. Thank you. Sorry, there are a few questions. Yes, sir. We just got a question from Sameer Baisiwala from Morgan Stanley. Please go ahead. Hi. Thank you so much, and good afternoon, everyone. A couple of questions. One is, if you can just talk about what does 18% embedded NOI growth over a period of time can translate into DPU growth? Sameer, we've just talked about the NOI growth that we see from here on a run rate basis to stabilization. I think DPU will be a factor of some other aspects as well, you know, like financing, et cetera. You know, you may probably make assumptions with respect to other factors, but otherwise this is probably how we think NOI shaping up as we continue to look at the portfolio stabilizing. In other words, Sameer, this requires almost nil capital investment, so all of this should ultimately flow through a DPU. Okay. What you're suggesting is that your DPU growth should broadly track NOI growth going forward. Yeah. There is about 15%-20% embedded growth in DPU potential of the existing operating portfolio. Okay. Now Ankur, that's very helpful. Thanks for that. The second question I had was, taking from your press release, that you have achieved 10% average escalation on 3.5 million sq ft of leased area nine months. If you can just talk about it. I mean, normally it would be 15%, but is there any... And, you know, 1/3 of the leases being on annual escalation, is that what's driving it? If you can just talk about this. Our escalations in the Kensington asset are typically an annual escalation of 4.5%-5%. The Candor assets typically have a 15% escalation every 36 months. The blended average of that in the nine months is a 10% figure, rupees. Okay. Okay. No, that's very clear. There's no change to 5% and 13%, yeah? It's just a mixed thing. Yeah? Absolutely. Okay. Just the page on the inorganic options. G1 rentals are at INR 75. Just curious, is this the market rate in that neighborhood or is it very highly under indexed? You're talking about G1? Yes. Yeah. This is an inflation. This is an inflation and of course, you know, some of the leases have been, you know, signed earlier. Of course, today, when we look at, leases are you know, could be happening at about 15%-20% more rentals than what is inflation. Okay. Well, which means if and when this asset comes in, will come with a fair bit of mark to market upsetting. I guess that's what I was trying to get to. Yes. Absolutely. Absolutely. Sir, one final question from my side is on the CAM recovery. How does this work? Is there, you know, now at 50% physical occupancy, are you pretty much there or you think there is some more scope for CAM to go up? Yes, Sanjeev here. Sameer. Normally our CAM is cost plus margin basis. Whatever we incur in the expenditure, the margin is added and recovered. With the physical occupancy of 50% there is a headroom of, I will say reasonably good headroom for CAM income to increase. If you just go to our slide number 13, where we have shown the organic growth potential, where we are talking of increase of 18% in our NOI, 30%-35% potential of increase in the CAM margin itself is there in our portfolio when we will get stabilized NOI. Yeah. Okay. Got it. Yeah, I can see that there. Thanks for that. Sorry, one more. I think you're going to talk a fair bit about the budget announcement, but just one more. This is going to be, if it goes through, it's going to be applicable from 1st April 2024. You would have, say, five quarters- You know, is there anything that you can do to mitigate the impact? We are not sure that that's the right understanding. Sameer, this one here, this is applicable from AY 24, which means it will be next FY. Yeah. Applicable from 1st of April next year for the coming month. Twenty-three. Yeah. Okay. Oh, I see. Okay, got it. Yeah. Thank you so much. Thank you. Our next question is a follow-up from Puneet Gulati from HSBC. Please go ahead. Yeah, thank you so much. This is effective for FY24, right? If it goes through for your FY24 income will be subject to this taxation for FY24 distribution. Distribution will be. Yes. Yes. Understood. Okay, do you make any different sense of what is the, you know, achievable range for all of your four locations currently? Is there a specific question on assets? Because we have stated the market rent versus in place, et cetera. I think you want any particular question. No, no. Like to like for each of the five assets that you have, if you can give some sense of where those leasing rents are moving currently. Yeah. Let me kind of, and I will, let me talk about what we are, what the leases we have signed in the last six months. Let's take- Yeah. N1. Today N1 we are, we are crossing INR 60, you know, INR 62, INR 63 as of even I think INR 65, INR 68 on smaller spaces. That's the kind of number we're talking about. N2 now, we have crossed something at INR 70, but I think INR 65 is the rent. What has got, you know, in last three, four months, what we are signing. When we talk about G2, it can be around INR 90. For a smaller space could be INR 90 plus. For a larger space could be slightly lower than INR 90. That's where we are on G2. On Capita, what we are hoping to sign, you know, something, you know, maybe should happen mid-INR 14, anything between INR 43-INR 45. Mumbai can vary between INR 116 to or rather I would say INR 120-INR 125. There hasn't been any meaningful increase in the market rentals per se over the last quarter, right? That's the message I should take home. No, I think, if you really look at Wada, which was we are in, you know, mid-INR 60s- INR 60s, now we are crossing INR 60- INR 63, which is N1. N2 we were signing out INR 60, we have crossed INR 65. We've got INR 65 there. You know, Gurgaon we are, we continue to be range between INR 92 and INR 95. Capita now we are around mid-INR 40s. Again, increase of course, something has to be realized in short time. Bombay is around INR 120, INR 125, which we have indicated earlier. Understood. That's helpful. Thank you so much. Thank you. That was the last question. Over to you, Mr. Ankur Gupta for closing comments. Yes. Thank you, everybody for your participation today. We look forward to getting back in touch with you shortly. Thank you. Have a good evening. Thank you, members of the management. On behalf of Brookfield India Real Estate Trust, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.